BLOG #29
As a recent college graduate with a lot of debt, financial uncertainty, and anticipating relocation to a new city, saving money is crucial to a stable short-term and long-term future. Here are my tips for saving money after college.
Forecast out a budget and stay accountable to it. Use a simple excel sheet to create your budget. Forecast the next six months and estimate your income, expenses, and plans to save. At my internship, I get paid bi-weekly, therefore my budget is projected out every two weeks. Make sure to fill in your budget with actual totals and compare them with your projections. From there you can make adjustments to the budget or your lifestyle according to how you are doing.
Low ball your income, overestimate your expenses. Most of the time when forecasting a budget, we tend to forgot about some expenses and are wrong about how much we are actually spending. Think about all the aspects in your life. Look through your bank statement history and find all the things you are spending money on. Are there any you can cut out? Can you spend less in one category? Account for the necessities and be mindful of the spending you have control over. Underestimate your income, make it hard for you to spend in your budget so that when you do have some extra cash you can either save it or put it toward future expenses.
What are you saving for? What is your motivation? For me I am saving towards relocating. After the Praxis bootcamp, I will be placed in a new city with a new job and I want to have enough money to pay for rent, transportation, etc. Living in any city is not cheap. Therefore saving enough money for first and last month’s rent and having emergency funds will make my move less stressful. When saving understand why you are doing it. It will focus your mindset on the budget goals you have created and you will be motivated to save.
Save your money in several accounts. Having multiple accounts designed for different purposes is a great way to manage your finances. Have a checking account for liquid everyday spending. Have multiple savings accounts. One savings account is used for college debt, where a portion of my paycheck goes every other week. Another savings account is used primarily for savings towards relocation. Having an Acorns account, (stock portfolio) is another way to save money and also earn some interest. This account is an emergency fund.
Deposit a percentage of your paycheck into your savings immediately. The best way to save is to do with without even thinking about it. When starting your new job, have two separate direct deposits where a percentage of your income goes directly to your savings account. If you can’t set up multiple direct deposits based on company policy, simply make bank transfers on your mobile banking apps every pay day.
The mindset you need to have with every potential transaction when trying to save money is very clear. Ask yourself, is it in the budget? A simple yes or no to this question will guide your finances. Especially when you are experiencing financial debt and are still trying to start your career and life, it is important to be tight with your budget and plan for the short and long term.
– Jake Beman