USA Today: Young in Debt series week 3, Saving money…how does it apply to us?
The USA today series young in debt is a great series of articles about five twenty somethings and discuss the various issues that affect young people in the world of money. On week 3 of the young in debt series, Saving money becomes a issue that many people in their 20’s have trouble doing. I completely understand why this is so. Imagine that you just finished school, getting your first check, you don’t want to live like a student again so you get your new IPOD or you new laptop or put a down payment on your very first luxury automobile. Yes i’m guilty of these things as well. The worst thing you can do though is reverse saving…or borrowing on your credit without plan to pay it off at the end of the month.
Another reason why saving when young is so difficult is because your paycheck doesn’t go very far. After taking all your bills that include: rent, car payments, insurance, food, utilities, cable, internet access, cell phone bill, and possibly student loans if you haven’t deferred…most of your pay is gone.
Financial Planner Melissa Eckstein discuss possible ways to make spending a part of your habits:
1. when you have a want, you should save for it and they buy it when you have the money. I think this is a great idea to differentiate a need vs. a want. A need, you can buy right away but a want, you should create a separate account for it and save a little every month. You’ll have enough money in no time. The critical part here though is: can you tell the difference between a want and a need?
2. make a budget for yourself by using a spreadsheet of somesort. The way that I go about creating a budget of somesort is by using an excel spreadsheet and making various columns for bills and liabiilites and writing down all my assets. I supplement that with www.yodlee.com which is an awesome program that I recommend for everyone. It is like quicken that you can get for free and is accessible everywhere you go. It updates all your accounts because the program connects itself to all your banks and updates as often as you like. It also keeps track of your rewards programs so that you know exactly how many miles you have on your delta miles or united miles for a free flight. With these two programs, it is really easy to make sure that I have enough money in each account especially because yodlee is set up to give me email notices for transactions. Its also great because I’m uptodate with all my accounts in case there is a fraudulent withdrawal in any account and I get notice of it on the same day!
3. Use cash not credit cards. I don’t agree with this! The reason why is because there are so many rewards cards out there. I hope that you will learn how to control your spending that you don’t need to use this strategy to spend less. This is because, over the past year, I have been able to earn over 400 dollars in cashback rewards which i wouldn’t have gotten if i used just cash. Also, using credit cards enables yodlee to keep track of your spending!
4. One debt at a time. This is a good way to go about tackling debt. Start with the highest interest rates first.
5. increase 401K contributions Thats a no brainer…you increase 401K after you tackled all your other savings and spending issues first. At least this message is true if your employer contributes to your 401K….emory doesn’t offer any contributions, dang it!
6. start an emergency fund Its nice to have that emergency fund. many people recommend having enough to live off of for about 6 months ideally. You should put this money in a very liquid account like a savings or money market account.
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[…] 5. Take advantage of student discounts. My school offers students a variety of discounts on movies, plays, sporting events, and more. Just for being a student, you can get certain things more cheaply. I am amazed that more people don’t take advantage of the discounts offered. The university is essentially throwing savings right at our feet, and many people don’t use it. If your college has any sorts of discounts, use them. There’s no reason not to, and it will save you money, which can be helpful in the long run. […]
Comment by Jerry
Emergency funds are a necessity in these uncertain times, and can lead to a little comfort and insurance in case Murphy decides to show up unexpectedly. I think it’s a great idea.
Jerry
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