Unlike a lot of people my age, I didn’t actually start working a full time retail job until I was 18 and out of high school. After I left college early in my first semester, my parents let me know that they’d provide me with basic necessities, but now that I was a legal adult, everything else I wanted was going to be on me. I had a small amount of money saved up from birthdays, holidays and babysitting, but I realized that if I wanted to keep doing fun and fulfilling things like traveling, I needed a steady source of income. It’s been nearly three years since then, and I can’t remember the last time I went even a few months without some kind of part-time job. I’m really proud of how far I’ve come in terms of my financial independence, but I’m still learning how to manage my money in ways that are both responsible (paying off small portions of my student loans every month so I’m not stuck with as much debt when I graduate), and fun (saving for my best friend's graduation trip).
Disclaimer: I have zero qualifications. I'm not a financial advisor, and you should definitely consult one before making any major financial decisions. I'm just a student who is used to operating on a tight budget, and these are a few simple rules I’ve picked up:
1. Do the hardest thing first -- look at your bank statements, and break down how much you’re actually spending on things you don’t need.
If you’re like me, and your bank statements usually go straight from your doorstep to the trash, it’s time to face the reality of how much you’re actually spending. You can’t cut out extraneous costs without knowing your spending habits. I first resolved to start saving more of my money when I opened one of my bank statements out of boredom at the end of last semester and was shocked at how much I had spent on “incidental” expenses like food, transportation and weekend trips with friends. Sit down with a calculator and a notebook, and map out not only how much you’re spending, but when you’re spending it. You can’t avoid spending money on weekend outings, but there are small sacrifices you can make to minimize your spending. Can you start going out two nights a week instead of three? Start looking into activities like free concerts, or check your school’s website to see if there are any interesting low-cost or free events on campus you can go to instead of heading off campus for the night.
2. There are tons of apps and websites that will help you save money with absolutely no brain power needed.
My favorite is called Digit -- it’s a ridiculously easy tool that, when connected with your primary checking account, tracks your spending patterns and automatically withdraws small amounts of money (50 cents or so), that you won’t even notice are gone. It’s essentially a savings account you don’t even have to consciously worry about depositing money into.
3. Still, you should have a savings account.
Or two. Or three. It’s an incredibly simple and painless step that will make sure you have money set aside in case of an emergency. Savings accounts are also a great idea if you need to save for a large individual expense, like a car or a vacation. Most major banks will let you have several savings accounts with no monthly fee, as long as you maintain a minimum balance (going by my experience with Bank of America, this balance is usually around $300 per statement cycle). To avoid paying monthly fees, make sure you do your research before opening a new savings account or joining a new bank.
4. Lists are your friend.
You don’t need to be a pro at Excel to make a simple list of your monthly income and expenses. Take the numbers you drew from your earlier look at your bank statement, and make a list of your fixed expenses (necessities that you buy every month), and the expenses you can afford to cut out— things like alcohol, meals out and new clothes (when your closet is already overflowing). Hint: if you’re still coming up in the red, you need to rework your budget. Not a penny ever was saved without a cost eliminated somewhere.
5. Leave your cards at home.
It’s easy not to think about how much you’re spending when you pay with credit and debit cards. A cursory glance at the total, one easy swipe and you’re done. The advent of Apple Pay has made careless spending much easier -- you don’t even need to open your wallet to spend money you don’t actually have. Instead, withdraw a lump sum from your bank account every week and keep it in a secure place. Take a small amount ($7-10 or so) with you every time you leave the house. You won’t be caught buying a $5 macchiato from your favorite coffee place if you don’t have the cash. The money you would have spent on small, unnecessary items like those will add up quickly-- trust me.
Important: most banks have limits on how much you can withdraw per month, so make sure you’re checking up on these limits at your bank. Check your balance online every couple of days to make sure you’re not overdrawn.
