So you’re in your twenties. You’re out of college, working that 9-to-5 grind, and earning your own paycheck. You’re living in a world of freedom where you can eat what you want, watch what you want, date whomever you want, and travel the world ... and then the bills roll in.
When you’re young and energetic, the temptation is to spend all your money doing fun things while you still can 一 I mean, you’re only young once, right? This is especially true for millennials. I feel like our generation values experiences and making memories over material things. I think this is pretty amazing, and I love that about us! But, unfortunately, the danger of overspending is still there. So what do you do when #yolo and #treatyoself go too far?
As much as we want to live in the moment and “be present,” we have to think about the future. The earlier we save money, the more we’ll have when we’re older. Our twenties is the perfect time to start building up our credit score because you never know when you’ll need to prove your “worth.” Life is unpredictable, so just when you think you’ll be single forever, suddenly you’ll find yourself getting married, buying (or renting ... this is SoCal) a house or apartment, purchasing a new car 一 oh hey! there’s a baby 一 saving for your kid’s college, paying homeowners’ fees and earthquake insurance…
This all seems daunting, and I’m not trying to scare you. These are all great, exciting things! My point is that the only reason they might terrify you is if you have no savings, a terrible credit score, and debt. The good news is that this can all easily be changed 一 and you can start now.
Saving money is especially hard as a young adult (and even more so in California) because you’re barely venturing out on your own. Your parents might still be there to catch you if you fall hard, but honey, when it comes to money, you’re on your own. Many twentysomethings are still at entry-level jobs, which don’t pay enough to cover expenses and save for the future. But I’m here to tell you that it is possible. It’ll take self-control, responsibility, and dedication, but your future self will thank you.
The even better news? All it will take is a few small changes 一 and they’re not drastic, either. There are easy ways to organize and manage your money. To show you what I’m talking about, here are seven simple tips on how to save money slowly and improve your credit score at the same time.
1. Check your bank account at least 2-3 times a week.
Have you ever checked your bank account to see if you got paid and realized you have $0.20 left in your checking account? And then you thank the LAWD that you did because otherwise you would’ve bought that ice cream and been in the negative? Yeah, I’ve been there.
An extremely easy way to solve this is by checking your credit card balance 2-3 times a week. You could even do it at the same time on the same days, like every Tuesday and Thursday morning. I personally hate getting constant notifications on my phone that aren’t texts, so I have a physical planner where I write out reminders each month. But if you’d prefer, you can set monthly notifications on your phone to pay your bill.
And Shannon recently informed me that, at least with Chase bank, you can set up your account to send you a text every single time you make a transaction. Every. Single. Time. Sounds super annoying, right? Yeah, well so is running out of money. Still, this is a great way to see just how much and how often you spend, and with these simple acts, you’ll always know exactly how much money you have and be aware of how much you’re spending.
I know I tend to spend in spurts. I can go a few days without spending a single cent, and then I go to the store one day for toilet paper and realize, “Hey, this chicken is on sale!” And then I see how fresh the fruits and veggies are, so I throw those in. Well of course I need a bottle of red wine, so I toss that in, too. Before I know it, a $10 trip has turned into a $50 one. The same happens with clothes. I go in to buy one shirt, and suddenly I’m walking off to the fitting room with a cartful of items that all happen to look great on me, so I just have to buy them.
You just never know. But by being aware that you have $50 to spend for the entire week, you’ll think twice about impulse buying.
2. Set your own credit card limit.
Believe it or not, credit card companies don’t like it when you max out their credit card. Crazy, right? Just because you have a $5,000 limit doesn’t mean you should be spending that much. Oh, you broke all your limbs and need surgery? Okay, you can spend. Your favorite store is having a massive sale, and if you don’t buy, you’ll be “losing” money? Get out.
My credit card has an “official” max, of course, but I set my own personal limit at $200-$250. If my bill meets or surpasses those numbers, I don’t touch my card until the next billing cycle. The advantage to this approach is that you know you’ll always be able to pay your credit card bill in full, and it helps limit your spending to what you actually want and need. I’m not about to go buy a $700 wallet, because that would exceed my personal limit. If you set your own limit, you practice restraint, which is absolutely crucial when it comes to saving money.
3. Set spending priorities.
When it comes to spending my paycheck, I have spending “priorities,” meaning that I pay for the important things first before I even think about buying other stuff for myself.
The first thing I do is tithe, which is 10 percent of my paycheck. Second, I pay off my credit card bills. Third, I move most of my money into my savings, leaving myself anywhere from $200-$400 of spending money per paycheck in my checking account. I’m then free to spend the $200-$400 on food, drinks, clothes, and whatever I see fit.
Now obviously this will be different for everybody. I live at home (and will for as long as I can, because the SAVINGS), but many people pay rent, perhaps pay monthly for various insurance, or are paying off student loans. Whatever your monetary responsibilities, always keep personal spending last and set (and maintain) a limit. That’s the only way you’ll ever save money and not go into debt.
4. Don’t touch your savings 一 ever.
Once you move money into your savings account, make a rule that you’re not allowed to touch it … ever. If your checking account is $0 and you say to yourself, “Well, I’ll just take a few dollars from my savings this time,” before you know it, your savings account will also be $0. If you set this limit for yourself, then you’ll be more cognizant of your spending 一 especially when you’re now allowed to dip into your savings. Remember: Every dollar you take out of your savings is a dollar you’re taking from your future.
5. Always pay your credit card bills on the same day each month.
Consistency is key for a lot of things in life, and this definitely applies to your bills. Humans are creatures of habit 一 we get up at the same time, sit in the exact same area of the auditorium, and follow routines. Why? Because it’s dependable and safe, and we like predictability.
My credit card deadlines are the 12th and 17th of each month, so I pay them both on the 10th. That way, I don’t have to worry about them anymore, and I’m meeting both deadlines ahead of schedule. This shows credit card companies that you’re consistent and responsible. Do you want to be that client that always pays the minimum $20 at 11:57 pm on the due date? Or the one that consistently pays off their entire bill at the same time each month?
6. Always pay the full credit card bill, not just the minimum amount.
Obviously the first step to improving your credit score is to pay your bills on time. But another way to raise that credit score is to pay the full bill, NOT just the minimum amount. If you do this, your credit score will go up, and it shows credit card companies that you’re good for your money. It also helps you practice restraint 一 for example, when you see that this month’s credit card bill is $3,000 and your wallet sheds little leather tears, you’ll know for next time that you need to control your spending. What would you rather have to pay off, a $350 bill or a $3,500 bill?
7. Never spend more than you actually have.
I thought this went without saying, but apparently I still need to say it: NEVER use your credit card to buy something that costs more money than you physically have in the bank. It’s too much of a risk, especially if it’s on something that isn’t essential. Do you really need to buy that new TV (no matter how wonderful and beautiful the picture is)? Do you really need that VIP table at the club? Do you really need a fifth designer purse?
If you really, really want something, then when you’ve saved enough money to actually afford it, you’ll still be willing to shell out the cash 一 except you’ll be good for it. And in that time, you can decide if you still actually want it. Trust me, you can have your cake and eat it too while still improving your credit score.
These are all common-sense things, but they will take discipline to put into practice. However, if you make these small changes, I promise you that you’ll be able to save for the future, better your credit score, and still have enough left over to have fun.
I’m not a financial advisor by ANY means, but these are all things I’ve actually been practicing in my life, and they have worked for me. My savings account has been growing fairly steadily, my credit score has never been higher, and I’ve been able to pay for my gas, car insurance, and other bills while still being able to treat myself. It is possible. All it takes is a little self-control and dedication.
If you have any questions or have even more suggestions on how to save, please comment below or send me a message.
Get those dolla dolla bills, y’all,