Wednesday, October 17, 2012

#16: Savings and #17 Budget

#16 & 17: Every single 20something should have savings and a budget.

This shouldn't be an area I am talking about because I am not super responsible in this area.  I don't have tons of savings. But I recently buckled down to start a decent budget, pay off any remaining nonschool debt (hello hospital bills and visa) and get some good savings established.  I don't go spend tons of money, but I am not always good about budgeting.  I stop spending if I don't have anything to spend, but thats not wise, I should have more saved up.  I spent over half my twenties in school which didn't give me a leg up on the financial planning and savings track....its hard to budget or save when you have very just learn to live off of that!

The good news is I can get ahead now and go into my 30s with some money put away and a good Budget.  Based on my little knowledge, here are my tips.

1. Don't get overwhelmed. Do things one step at a time.  You don't have to do everything recommended all at once! Do what works for you (IE a theory might be good but it may not work for you) Baby steps and small improvements.

2.  Write it down.  If I make a plan for what I need to pay in bills, groceries, etc, I tend to stick closely to it.

3. CASH.  I am still trying to get in this habbit, but using cash is a good idea for groceries, gas, clothes, etc.  Kindof like the Dave Ramsey method except forget the multiple envelope plan.  Just say I have x amount a week for groceries, eating out, gas, etc.  If I use it all on eating out, I cant buy groceries, etc.

4. Eat in more.  I have been doing this and saving money.  Also, use coupons, I saved 1/4 of my grocery bill a few weeks ago.  I am not an extreme couponer, but printing coupons out on my lunch break is totally worth an extra 25 dollars in savings!

5.  Splurge.  AKA, don't deprive yourself in order to have tons of savings.  Well, deprive yourself some, but what I mean is, don't think you can never have dinner out or a new pair of jeans.  Just like a super strict diet, you will easilly fall off that wagon.

6. Allow for emergencies.  Know that every now and again, you will need new tires or have to go to the doctor. I am awful at planning for that.  Also, you will have months where you have to buy a million birthday, wedding, etc gifts and get your hair cut and oil changed.  Some expenses aren't monthly, plan for those too.

7.  Read books, take a class.  Right now, Dave and I are taking an investing class.  I have no "financial skills" and thats okay, it helps to read and learn about it. Also talk to people who know. 

8. RELAX. Short of bankruptcy or 200,000 in debt, few things in your twenties can't be recovered from. I wish I had started saving more money earlier, but the truth is if I start now, I can still save a good amount.  Same with debt, if you are in debt or if you have school loans, you can pay this off.  Also, if you invested and yoru stocks dropped with the market, you're young and it has time to rebound.  (In investing class, we learned that there is a certain amount of riskyness allowed for younger investers because they have more time) The good news is that you aren't doomed.

9. automatic deposits and online bills -- serious this makes life so much easier.

10. Small savings tricks.  Dave and I have recently used coupons for restaurants (yes im that person).  Or, I want to start a workout jar where I put a dollar in every time I work out.  I won't miss a dollar and that money can be used for little extras like pedis or a new top every now and then.

As I said, I'm no expert, but atleast I've started getting together a financial plan.  Every 20something single gal should know a little about finances.  I suggest starting with Suze Orman's The Money Book for theYoung, Fabulous and Broke.  She lays out basics pretty well and she's a little more realistic than Dave Ramsey.

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