Now that I’ve graduated from college, moved away from home and landed my first “big girl” job, I’m finally financially independent.
Although I get great satisfaction in knowing that I can take care of myself, the transition from student to independent adult was and continues to be a learning experience in — you guessed it — money management.
During the past few months, I’ve learned and used a few tips and tricks to help me cut back on my expenses and, when necessary, stretch my hard-earned dollars. I’m hopeful that other college students and recent graduates can benefit from this advice.
1. Separate necessities from luxuries.
When you’re living on a budget, it’s important to differentiate between the things that you need to have and the things that you’d like to have. For example, why spend your pennies on high-speed Internet and extended cable when a moderate connection and basic cable (not to mention free online TV) is all you really need? It’s also important to think about where your money goes (eating out, a biweekly pedicure, a daily Starbucks latte, etc.) and evaluate if those expenses are putting your money to the best possible use. Chances are, there are plenty of ways you can cut back by separating the necessities from the luxuries.
2. Make a plan and stick to it.
Once you’ve differentiated between the necessities and luxuries in your life, make a plan on how to indulge in these luxuries and still save your money for the necessities. For example, if you need your morning coffee to function at work, designate one day each week that you let yourself indulge at Starbucks. On the other days, make coffee at home. Personally, I love to eat out, but I try to bring my lunch from home and cook dinner as much as possible. I usually buy my lunch once each week, and I eat a meal or two at restaurants on the weekend only.
The transition from student to independent adult is always going to to be a learning experience.
3. Eat at home.
I know I’m not alone in my love for eating out, but my wallet (and my waistline) can’t afford to eat at a different restaurant every night of the week. Cooking your own meals is not only less expensive than eating out, but it’s also a good way to ensure that you’re eating nutritiously. As you get more comfortable in the kitchen, you might even discover that you like cooking and have a new hobby on your hands.
4. Shop around.
I learned this lesson when I started cooking and — as a result — grocery shopping, but shopping around for the best value is smart in almost every situation. For example, don’t just reach for the name brand at the grocery store. Instead, calculate ounce per dollar to determine the most bang for your buck. Remember that although buying in bulk is usually a good option, it’s important not to buy more perishable goods than you can use before they expire. Also, shop around before purchasing insurance and choosing a cable and internet provider.
5. Take advantage of local deals.
I live in a college town, so I have access to countless restaurant, salon, bar, store and event deals that come with them. Even if you live in a big city, it’s easy to find local deals if you’re willing to do a little research. In addition to joining sites like Groupon or Living Social, peruse your local paper and go online for coupons and other promotional information. You’ll be amazed at how you’ll be able to keep up your fabulous lifestyle without breaking the bank.
6. Unplug as much as possible.
For most newly independent young adults, the first utility bill can be a shocker — especially in the middle of summer when the AC is on full blast. It’s silly to suffer from the heat in the comfort of your own home, but there are little things you can do to minimize your utility bill each month.
• Keep it warm in your house or apartment when you’re at work.
• Wash your clothes in cold water.
• Hand wash large pots, pans and dishes.
• Pack your dishwasher full.
• Let the dishes air dry.
• Turn off lights when you leave the room.
• Unplug small appliances when they’re not in use.
7. Don’t let debt pile up.
Even if you’ll have little leftover until your next paycheck, it’s important to pay off your credit card and other bills each month so you don’t hurt your credit score and accumulate interest and debt. Student loans are a killer for many recent grads, so be sure to account for loan payments in your budget and then stick to your plan.
8. Show your car some love.
Getting an oil change every 3,000 miles and replacing your tires when it’s time can be expensive, but it’s not as expensive as getting a tow truck and paying for heavy-duty repairs when your car breaks down. The same goes for keeping your car insurance and registration up-to-date. It’s better to pay for these expenses on schedule than get caught with expired license plates and have to scrounge up money for an expensive ticket.
9. Make travel plans ahead of time.
Your twenties are all about having experiences, and traveling is a big part of that. Sure, seeing the world probably means cutting back in other areas of your life, but it’s a sacrifice that’s well worth it. The best way to travel on a budget is to plan ahead as much as possible. When you plan, use budget-friendly travel tools such as Expedia.com. Consider staying in hostels or crashing on the couches of friends or family members to save money while on the road.
10. Pay yourself.
When there are bills to be paid, concerts to go to and new shoes to buy, saving money can seem difficult and, at 20-something, a little bit unnecessary. But what happens when you lose your job, want to spend a year abroad or, later on, are eyeballing retirement?
You simply must set aside funds for savings. If your job offers a great 401k plan, your savings are taken care of for you. If not, however, you have to make the conscious effort to save a little of each and every paycheck you earn. Put 10 percent of your check into a savings account that you vow not to touch, and put the rest into your checking account. By doing this, the money set aside for savings will be out of sight, out of mind.
Although I still struggle with a few of these money-saving tips from time to time, I’m confident that my current frugality will pay off down the road.
Even though I’m cutting back and trying to make the most of my money, I’ve found that I’m not missing out on anything that’s important to me, including a social life, travel plans and everything else that makes post-grad experiences great.
I hope that by taking these tips into account, you’ll be able to strike the balance between fully enjoying your twenties and practicing the right amount of financial responsibility.
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