It is hard for anyone to save money. You often think you have to cut corners here and there to save enough money to mean anything. This is not true at all. Anyone can save money no matter how big or small the amounts might be.
Before you start reading all of this, I want to hammer something into your head. START SAVING WHILE YOU ARE YOUNG! Without bills to pay, children and pets to buy things for and few responsibilities.
This might be obvious and sound a bit silly, but working is how you make money. The sooner you get to work the better. It may not always be a glamorous job depending on your age and previous job experience, but it will be enough to get you started.
2. Live with Family
I know, I know. Who would want to live with their family more than they have to? Me. I am 21 years old. Do I really want to be living with my family? No, not really. After time I have realized that maybe it is not such a bad thing. I do not have to pay rent or a mortgage, for my own groceries, utilities, HOA payments and other expenses in life. All of these expenses add up much quicker than you expect, and suddenly you do not have any money do go out to the movies or a date night. I pay for my phone, car payment, and car insurance every month. In total I have a consistent $550 in expenses each month.
Each paycheck that I receive, I put money into four different locations for savings. I put money into my savings account with my bank, into the Qapital app, my brokerage account, and a Roth IRA account.
a. Savings Accounts! – If you have a bank account open, then you have a savings account as well. I actually consider this my last line of defense if I were to be hit by a financial burden. I would touch this money last. At this point in time, I transfer 7% of my paycheck to my savings account. 14% of my monthly income.
b. Qapital App – I found this app in late 2019 and I will never stop using it. This app has many different options on how you would like to save money. I have three savings goals at the moment. An emergency fund, vacation fund, and a future home fund. I use the savings rule of “Set and Forget”. The app takes $25 out of my bank account every week and puts it into my emergency fund, and $20 each week into my vacation fund. I have two rules set up for my future home fund. A set and forget of $15 a week, and a “Round Up” which rounds up any spending on my card to the next $1. If I spend $49.25, the app will round that up to $50 even, and deposit $.75 into my fund.
If you are interested in downloading the Qapital app, use the code bd7563ch and get $25! Who doesn’t love free money!?
c. Brokerage Account – What is a brokerage account you might ask? It is a stock investment account. You might be thinking stocks? Really? Yes. I started investing when I was 16. My dad opened up a custodial account because I was under age, but I was in charge of depositing my own money, and investing it in the companies that I wanted to invest in with my fathers advise. I have grown my brokerage account to over $21,000. Most of that is my own money, but some is from dividends. I buy into stocks that have a 4% dividend pay out. This means you are receiving 4% of your position back from the company as a thank you and an incentive to continue to invest in them.
If anyone would like to know more specifics, please feel free to reach out!
d. Roth IRA Account – What the heck is a Roth IRA? It is an individual retirement account. START SAVING WHILE YOU ARE YOUNG! The earlier you start saving, the better off you will be in the future. Starting young will help set you up for success in the future. Roth IRA’s earn compound interest. This means your money will roughly double every seven years. The earlier you start investing into a Roth IRA account, the more your money will double before retirement.
3. “Budgeting” or Cutting Back
Budgeting may sound silly but it really is helpful. Take a look at your spending now, and see how much money you have before receiving your next paycheck. If you spend a lot, try to cut back on coffee, subscriptions that maybe aren’t need, fast food spending, etc. I try to limit myself to one or two coffees a week which is a big improvement from five a week. This saves me roughly $15 a week, or about $780 in a year. That is just on coffee alone. Try to eat lunch from home four days a week during a work week, but spoil yourself one day. Depending on how much you normally spend, this could save a dramatic amount of money each year.
This does not mean that you cannot go out and enjoy life and do fun things. Cutting back on spending allows you to go to more concerts, go on more trips and so much more. It is making sacrifices for the better.