I’ll start by saying that I’m someone who believes that you can afford anything if you budget. Since college, I’ve been pretty independent financially. Coming from a family of six I knew that college was expensive. I decided that when I started school I would not ask for money. Not to mention asking wasn’t always an option for me.
With that being said, I like to budget, and was excited about the possibilities of what I could do when I received my first paycheck. I am in no way a financial planner – although my friends say I’m pretty good at it. Still, the tips I’m going to share allowed me to pay a number of bills including purchasing a new car, while helping my family, and enjoying my social life.
Open a savings account.
I know, duh right? If you have trouble with constantly “borrowing” from yourself, never thought of opening a savings account, or are looking for an additional bank account, I recommend PNC Virtual Wallet. The PNC Virtual Wallet account gives you a checking, reserve, and savings account. This layer between checking and savings is pretty worthwhile and helps me to leave my savings alone. Another option is to open bank accounts at two separate institutions.
Start with a plan.
I took a position as a sixth grade math teacher my first job out of college. In training we learned about backwards planning – start with the end in mind. This proved not only to be a successful strategy in the classroom, but also in my finances. Since I lived in Texas and there was no public transportation, I had to buy a car. I anticipated possibly going back to school in two years and knew I wouldn’t have an income. As a result, my goal became saving enough money to pay off my car loan in three years.
Therefore, think about your goals. Is there a certain amount of debt you want to see gone? If you lost your job would you be able to live for the next six months unemployed while you search for your next career move? A good way to calculate this is to add up all your bills for one month and multiply this number by six, then turn the figure you get into a savings goal!
Now that you have your savings goal, divide it by twelve.
This new magical number is now a bill. You will need to pay this every month to yourself. It’s not a figure that is necessarily set in stone but you should treat it seriously.
Compare the monthly total of your bills (including monthly savings goal) with your monthly salary after taxes.
One of the number one reasons people don’t meet their goals is because they weren’t feasible in the first place. Add up all your bills including the savings goal. Do you have enough money to live your life outside of bills? This means groceries, gas, entertainment, and haircare (yes hair is in its own category). Don’t set yourself up for failure when you know you can’t live off of $100 a month. Remember that the magical number is a starting point. It can be adjusted – but do this in the beginning and only change it if your bills or salary dramatically changes.
Write it down.
Make a monthly list of all the bills you have. I did this every month and had it hanging on my bedroom wall. I always felt good crossing everything off, and even better when the money started adding up in my account.
Take it seriously.
Let your savings goal be one of the first things you pay. If you pay it like a bill it will become a habit. And it will also boost your confidence because you now have a tangible example that you can do anything you put your mind to!
Be happy – You’re on your way to saving $$!