Saving money can be daunting when you already have a long list of necessities. The entire concept of saving up feels synonymous with giving up on fun and turning your back on anything “luxurious”. However, that’s not the case. Saving and budgeting is about spending smartly and planning.
Here’s how I saved $1000 in one month at 21.
- 50/30/20 Rule: I follow the 50/30/20 budgeting rule. 50% of your income goes to necessities: rent, groceries and transportation. 30% is put towards flexible spending: shopping, entertainment. The final 20% goes to directly into savings. What I love about this rule is that it’s flexible. I typically exchange the 30/20 parts of the rule because I don’t spend the full amount on my “wants”. However, the key part of this rule is to plan to save, don’t just wait to see what’s left over.
- Write It Down: Track your spending habits. Where is your money going – food, online shopping, random subscriptions? Identify where you can cut back and adjust. I found that a lot of my extra money was going towards eating out. Instead of splurging during the week, I set a goal to cook meals at home Monday – Friday and only order out on weekends. I saved over $20 throughout the week!
- Transfer Your Money ASAP: Transfer that 20% into your savings immediately. Then, don’t touch it again. Transferring your money into your savings makes it even easier not to spend. I aim to review and separate out my money on my paydays.
You can still splurge a little while saving!
- What Do You Really Want?: Keep a list of higher-end purchases or activities that you enjoy. Make those your savings checkpoints. Do you like to brunch on weekends? Write down the expense and save up a “brunch fund” using the 30% of your income. This helps to keep you in line with your budget while still enjoying your favorite things.
- Monetize Your Skills: Are you a budding MUA or hairstylist? Do you enjoy making graphics? Earn a passive income by monetizing your skills. I enjoy making websites, however it takes a lot of time so I charge a small fee. Any money I make from web designing goes straight to my savings account.
Saving money is important at any age. Even if it’s not $1000 in one month, any addition to your savings account is something for a future purchase or rainy day. Be smart with your spending and always plan ahead. Remember, saving up doesn’t mean you can’t have fun. It means your mindful of your wallet.
Drop your savings tips and questions below.