So saving in your 20s can be a bit of a task, I know, I’m there with you. What makes it hard is that; in your 20s you are suddenly thrust into adulthood where you have all these new expenses that you never had before. It’s horrible. Adulthood is not fair. But it has to be done. So let’s look at ways you can start saving money in these early years of adulthood, shall we?
1. Keep Track of Your Expenses!
First you need to establish what you spend your money on. The best way to do this, is to collect every single till slip and receipt from every transaction you make for a month. Make sure you label the slips, so you know what you bought. After a month of doing this, go through your expenses and calculate how much money you spent on food, clothes, entertainment, bills etc. This should give you a good indication about where the bulk of your money is going. (A BULK of my money goes to food. Like, a lot of food. A girl’s gotta eat!)
2. Draw Up a Budget!
Look you don’t have to have an accounting degree to draw up a basic budget. But for those of you who are not sure how to do this, you can google a budget format, or your computer should have a template in your Pages or Word app. But basically you need to compare your projected income against your projected expenses (based on your past expenditure)
When working with your expenses, make set amounts for each expense (how much you’re willing to spend on each thing)
If you’re keen to save money, you should always ensure that your Expenses are less than your income!
Now try and stick to this budget each month- it’s going to be hard but you have to be STRICT with yourself.
To draw up a digital budget, check out Mint
3. Set a Savings Goal.
You will need a long-term goal (What you’d like to have saved up after 5 years) and a short-term goal (What you’d like to have saved up by the end of the year) Many experts advise that you should save 10% of your monthly income. That’s not too bad! That’s like R100 of every R1000 you earn! You can do this!
4. Start Saying No!
You don’t have to attend every single party, see every single movie on circuit or have the latest pair of jeans. Saving money means self discipline. My trick is to have a set amount in my bank account that I refuse to go under, so once I reach that amount, I start telling my friends, ‘Ahh, sorry, I can’t. I’m broke” – when in actual fact I’m not. Pretending to be broke could really save you money. But make sure that that set amount increases every year – otherwise you’re just standing still.
5. Think Your Purchases Through.
No more impulse buys! From now on, if you want something, give yourself a week to think about it. Is it worth it? Does your budget allow for a new expense? Do you really need it?
I know a lot of people spend money for other people. We buy cars, clothes, shoes etc. that we can’t afford because we are so obsessed by what others think of us. Forget about them! They are not going to pay your bills. Focus on you and what you can afford.
6. Start Looking for Investment Options.
Investing your money in a Unit Trust is one the smartest way to make your money work for you! You Earn interest on your money by doing nothing! Just investing it! Girl!
If you are looking into Investment options, but you don’t know where to start, Satrix.co.za is a good place to start!
Or if you’re scared of investing, try a fixed deposit with your local bank. The interest rates are a lot lower, but you’ll see the power of investing and start building the confidence to invest more.
And now, a quote, courtesy of my dad, the investor;
Rumour has it that Albert Einstein once said “Compound interest is the eighth wonder of the world. He who understands it, earns it … he who doesn’t … pays it.” Whether or not he actually said it is a moot point. That’s the topic of another blog in this series of financial independence. What matters is that you start investing as soon as possible. The best time to start investing was 10 years ago; the 2nd best time is now.
So Those are my tips for saving money in your 20s. The trick is to remember that your financial situation is private, if you want everyone to know how much money you have, you may need to grow up a little bit. You’re not in financial competition with anyone, so you don’t need to buy things to give the impression that you’re doing well. When you’re financially secure, it will speak much louder than the new pair of Nikes on your feet.
What are your tips to saving money? Be sure to comment them below and share them with us!
Until Next Time!