How I Plan On Saving $10,000 In Ten Months
/I believe savings are an integral part of financial independence, and regardless of our income, we should all be saving something. Even twenty dollars saved this month could be what gets you groceries when all of your bills are auto drafted and you don’t get paid for 5 days. I’ve been there, in college I worked part time jobs that helped stop the gaps of my financial aid, and there were many times a twenty dollar bill made a major difference in my diet plans.
Realistically we should all be aiming to save 3-6 months of our income within 18 months of being gainfully employed, especially if that job pays you eight that you’re (somewhat) comfortably in the middle class, with no dependents. (Here is a link to the Pew income calculator).
Savings can take many forms; you can auto draft your savings(if you do that you should absolutely be using an online bank with an interest rate of at least 2.0apy( and aim for one that distributes interest monthly(such as Varo, where you can earn up to 2.12%APY monthly)), you can withdraw the cash and put it into a piggy bank( for our generation his works really well because we tangible money(cash) feels more real, so were less likely to dip into our physical piggybanks but a lot more likely to swipe our cards) , or investing(but let’s save that for more in depth post, shall we?).
You’re probably asking me how to save money when the past few pay days came a few days too late in your opinion, so I going to list five tips that I use(or try to, because transparency) that allow me to auto draft my savings biweekly without breaking a sweat. I will also be using these tips to save $10,000 over the next ten months.
Increase your income. Most millennial are being underpaid, or at leas we are in relation to relative living expenses, especially if you reside in a major city. How can you increase your income? Ask for a raise, find a part time serving or bartering job, dog walk , nanny/ babysit, retail or barista jobs have flexible hour and pay a relatively high hourly wage for “unskilled labor.” At this point in Our lies we more than likely only have our selves to think about, clothe d feed. If you spend 20 hours a week of your free time working instead of spending money or relaxing, that’s about an extra $1000-$1500/ month(or $12000-18000/year). Saving all of that income is extremely realistic and will put you so far ahead in your financial goals. We cant get time back, so we should absolutely be maximizing it. Our twenties and thirties are the perfect time to do that.
Decrease your spending. Seriously. With the extra income from your second source of income, you may be tempted to treat yourself. Please, don’t. Lifestyle creep(spending more as you earn more) is how people stay as broke even as they earn really good money. Financially smart people will decrease their variable expenses as they earn more. For me, this means I don’t buy new clothes more than five or so times a year, I still opt for public transportation even though Uber’s are so accesible and relatively inexpensive, I use my sisters Hulu and Amazon accounts, I rent books from the library and study/write in he library in lieu of Starbucks or other coffee shops, and finally, I try to make sure 90% of what I eat I prepared myself. Eating out is definitely where my budget has gone to die, and more than once.
Have a grocery budget, and use cash. Since I essentially halved my grocery and eating out budget at the beginning of 2019, there was a steep learning curve. Carrying a card to the grocery store doesn’t work for me. I always end up leaving with about double what I needed or even wanted. I start by figuring out what I want to eat for dinner and breakfast for the week, then shopping my kitchen for ingredients. I then make a list and approximate the costs, I withdraw the cash and go shopping on Sunday evenings, make food Monday or Tuesday since my work week usually starts on Wednesday. I have had to put things back many a time, but since I still want to eat out and I count restaurants/bars in my grocery budget, I prioritize. I like going out with my family and friends so I have to be super fugal in grocery stores. This works for me, I can get away with spending about $120/ month at the grocery store, which is $30 a week. My (specifically for groceries) budget is $150/ month, and I rarely use all of that. ( I am a single person who eats mostly plant-based at home, so that helps, significantly).
Pay yourself first, with direct deposit. Make your savings a priority. Treat your savings goal as a bill, and pay it before you do any discretionary spending (bars, amazon, shopping, etc). I recommend breaking your savings goals into two lump sums and scheduling the auto-draft on the first and the fifteenth of the month, or whenever you get paid. I use Varo and c only sing its praises. If you too would like to experience ridiculous interest on your liquid savings, feel free to use my link to sign up for an account Varomoney
Have a buffer. A good rule of thumb is to have the amount of your largest auto-draft in your checking account. I like living life on the edge, so my buffer is only a fifth of my largest auto-draft, but I compulsively check my account so it has been some time since I have been charged an overdraft fee. Banks made billions last year in overdraft fees, stop giving them your money. Create a realistic buffer.
Put your spending money in a separate account. If you have a Venmo, cash account or are a responsible credit card user( as in you don’t carry a balance from month to month) this is fairly simple to do. Either order a cash or Venmo debit card and put your spending money on the card on the first of the month and only use that money. Once it runs out, it runs out. You can also use a credit card for this, but be careful to follow the same guidelines; if you budget $300 for fun money for the month, don’t charge $350 because it means you are taking money from somewhere else, or you’re creating extra consumer debt , which is what we do not need to do, especially in our twenties.
Be patient with yourself. Habits that we’ve had for five or more years don’t change in a month. It takes about 45 days to build a habit and 90 days to build a lifestyle.And we are absolutely building a lifestyle. And at the end of the day, saving $7,000 or $8,000 is a lot better than $0.
