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What is the easiest way to start saving?

New Contributor

What is the easiest way to start saving?

I am 20 years old and have a good job for my age. I am a college student, and still live at home. i do have a problem with learning how to balance my budgets and saving my money. I need more help trying to. I feel like credit cards get in my way, but I now have paid down all of my balances to 0 and feel really good about it but I feel like it has drained me. Any advice on how to save more money?

 

I make like 28,000 a year, and only have to pay for gas and phone bill so I am extremely lucky. I am now more relying on my debit card then credit cards and I think that is starting to help me out a lot.

 

Thanks in advance for the replies.

Message 1 of 16
15 REPLIES
Frequent Contributor

Re: What is the easiest way to start saving?

Can you sign up for a 401K or other savings plan through your job?  If you can have the money taken from your check before you ever get it that may help you with the savings. 

Message 2 of 16
Regular Contributor

Re: What is the easiest way to start saving?

Budget.
Place savings at top, not bottom, of said budget. Bottom is where things go when you "might" do then "if". Savings is something you want to do always, starting now.

I use a homemade spreadsheet but there are any number of apps, websites, pregame, spreadsheets available for your trial and use for budgeting purposes. It's like exercise - whatever you will keep up is what you should use.

See recent thread regarding investing in retirement options. Start now! This compounds quickly with age.

Definitely do your best to stick to what you can afford of your income only from now on. You want your cc's to be a tool not an anchor - form good habits. You can let a small balance report on one, best is under 9% (of your total credit limit), the rest at 0.

But you really don't want to make a habit of "floating" purchases on credit day to day, or maxing out cards. Especially without budgeting and reviewing.

So 1. Budget (savings at top!) 2. Check into retirement investment options 3. Cash diet. Those are my recs.
Ch7 discharged 10/2017. Pre-file FICOs high 400s.
11/2017 EX 609; EQ 634; TU 583
Message 3 of 16
Frequent Contributor

Re: What is the easiest way to start saving?

 

Take advantage of having no financial obligations and your low tax bracket and put money into a Roth IRA!  I made that red, bolded, and italicized because it is really important.  You can start this year -- you can contribute $5500 this year.

 

The easiest way to save money is to pay yourself first.  By that I mean put money into an account that you won't frequently access except for depositing money into it -- I suggest opening a brokerage and a Roth IRA account at Vanguard, Schwab, or Fidelity.  Then put away $1000/month (or $500/month if you are a spender).  Then invest 3/4 of that money into low-cost Index Funds.  The remaining 1/4 will remain cash as emergency savings that you will grow over time.  Once you've grown your cash, then increase the amount you're investing.

 

You will be left with approximately $600/month to spend, but that doesn't mean you have to spend it all.  Try to save some of it -- $100/month.  Eventually, with practice, you'll get good at saving money.  You'll enjoy seeing your savings grow and you will realize that some discipline early on will give you freedom later. 

 

Oh, download and read If You Can, How Millennials Can Get Rich Slowly by William Bernstein (https://www.etf.com/docs/IfYouCan.pdf)  It's only 16 pages and gives a nice guideline for saving and investing realistically. 

 

 

Message 4 of 16
Established Contributor

Re: What is the easiest way to start saving?


zachbriscoe7 wrote:

I am 20 years old and have a good job for my age. I am a college student, and still live at home. i do have a problem with learning how to balance my budgets and saving my money. I need more help trying to. I feel like credit cards get in my way, but I now have paid down all of my balances to 0 and feel really good about it but I feel like it has drained me. Any advice on how to save more money?

 

I make like 28,000 a year, and only have to pay for gas and phone bill so I am extremely lucky. I am now more relying on my debit card then credit cards and I think that is starting to help me out a lot.

 

Thanks in advance for the replies.


Saving more money requires a shift in mindset, just like dieting does. You have a gift horse right now in the form of free rent, so that may be a good place to start. Pretend you *are* paying rent, and the landlord is a savings account or similar.

 

Other things that really got me going down this road are:

 

1. Set a budget for what you need to live. Start with something modest but attaintable. Go three months and do not overspend your budget.

 

2. If you make it 3 months, re-evaluate and see if you can decrease it a bit more. Try it for another 3 months and repeat until you're at a budget that you are comfortable with.

 

3. Now that you have your budget you're comfortable with, stick with it. You will get pay increases and new jobs. These don't affect your budget. The budget you set when you're making $28,000 should be the same budget when you're making $58,000 or $158,000 as well. If you move to a new area, the budget will need to be re-evaluated (start at step 1 again). Once you move out and get your own place, start again at step 1. If you get engaged/married, step 1. You get the idea. The key is that more income does NOT mean bigger budget!

 

A few other things to help with the mindset.

 

- In the 30s, a saying became popular: "use it up, wear it out, make it do or do without." This is still good advice today. People are quick to replace items before they're really worn out, and those costs add up. People trade in 3 year old cars for a newer model rather than driving them until the wheels fall off. People buy more food than they need and throw away the excess when it spoils, or even before it spoils. Simply being more efficient with what you buy and use will save a ton of money just by itself.

 

- A person can live comfortably in 300 square feet of house, two people can live comfortably in 600 square feet of house, and so on. Children under 5 count as 0 for this (that is, 2 adults and a baby can live in 600 square feet). This is particularly true where I live, but it applies elsewhere as well. People turn their noses at smaller homes and end up spending every penny they have on a bigger home because they think they need a big house with an "open concept" kitchen and stainless steel appliances and all that other HGTV garbage. It's gotten in their heads, which is a good segueway to...

 

- Realize just how hostile marketing, consumerism, and competition are to living within one's means. Don't watch ads, or at least don't act on them. Don't let emotion get in the way (marketing loves to goad or guilt you into buying things). The world wants to take your money; don't let it.

 

Once you are living beneath your means and saving money, be proud of it. People will question why you have money in the bank but don't have a fancy house or car or clothing. Those people are called idiots and you shouldn't listen to them. 

Message 5 of 16
Established Contributor

Re: What is the easiest way to start saving?

There is some great advice here.

 

Retirement savings is great. In addition to that, I found that it is good to have a savings account at a separate bank that isn't tied to your checking. Split your direct deposit and route 15% or 20% or whatever to that savings account.

 

The % is good because as you receive salary increases the amount you save will increase.

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Message 6 of 16
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Community Leader
Senior Contributor

Re: What is the easiest way to start saving?

Such wonderful advice from everyone.

 

The first great piece of advice was the one you gave yourself.  Vast numbers of people find that credit cards induce them to spend more money than they absolutely have to.  Much much more.  Your decision to switch to debit cards is therefore an extremely smart move (not an absolute rule for everyone, but the right rule for you)..  Use credit cards only for absolutely necessary purchases, like a cell phone or whatever.  Take all unused cards out once every six months to the grocery store and buy one small necessary item each with them.  (There are other strategies for keeping them active.)

 

Let me also strongly second the Bernstein book that TacPoly urged you to read.

 

And yes, Roth IRAs are a great choice.

 

Your priority should be first to sock away as much money into your workplace 401k that will give you matching money.  Otherwise you are leaving that free money on the table.  Then fund your Roth.  Then there are other places to put it.

Message 7 of 16
New Contributor

Re: What is the easiest way to start saving?

For me, an easy way to start saving is one of those apps that basically automates your savings for you. There are multiple ones out there, but the one I use is called Qapital (weird name I know). With this app you can set your savings "rules" which decide how much you save. For example, it gives you the option to round up your purchases to the nearest dollar or two dollars and save the difference. Or you can set a certain amount to automatically save each week/month/etc. Or you can do the 52 week money saving challenge. Etc, the list of savings rules you can pick from is kinda long. I really like this app. It makes saving money easy for me because it comes out automatically and I don't have to think about it.


When the money that I've saved reaches a decent amount, I like to transfer it to my high yield savings account. With the high yield savings accounts, you're earning alot more interest than most normal savings accounts. I chose an online Goldman Sachs savings account because the interest rate is 1.2%, which is one of the highest available. 

 

That's just what I've found to work best for me. I also use several apps which each pay me a little bit here and there for taking online surveys, etc and then I also put that money into my high yield savings account. But that's another story Smiley Tongue

Message 8 of 16
Valued Contributor

Re: What is the easiest way to start saving?

When I was your age (six years ago) I had difficulties in saving money too. 

 

Who do you bank with? 

 

Bank of America has a program called "keep the change" where they'll automatically round up your debit card purchases to the next dollar (ex: a $4.51 purchase will invisibly round up to $5) and they'll take the $0.49 and put it in your savings account.  Wells Fargo has a program called Way2Save which transfers $1 per debit card purchase from your checking account to your savings account. 

 

If you want to balance your checking account then use a transaction register. Debit card purchases are basically plastic, electronic checks, and the same goes for ACH transfers. Fill out the transaction register after every purchase, direct deposit/ACH transfer so you'll know how much money you really have in your checking account. Never rely on what the bank's computer tells you. 

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Message 9 of 16
Established Contributor

Re: What is the easiest way to start saving?

Sounds like you're on the right track. Though I highly encourage using a cashback card when you have the discipline.

 

Are you familiar with Excel? This is what I do for each credit card (Similar for bank accounts):

Excel1.png

 

Then I have a summary tab that shows the balances of each card and account. I have formulas such as Checking Balance - Credit Card Balances to show my personal available balance. This way I operate just the same as if I were using a debit card, but get cash back.

 

As for savings, I always take a chunk from my paycheck and transfer it over to savings the day it gets deposited. I keep the confirmation numbers and amounts in my "check register" Excel tab and everything links to each other (I'll be happy to help with any formulas if you want to PM me).


TU FICO 8: 750 (11/17) — Ex FICO 8: 732 (12/17)
Message 10 of 16