It’s normal for young professionals to face difficulties in saving up. On the one hand, it?s very exciting to finally live on your own and enjoy the fruits of your labor. On the other hand, earning a meager salary means there isn?t much extra money to save up.
This usually brings young professionals to a scenario where they live paycheck to paycheck. However, this doesn?t mean you should not be saving money and not preparing for the future altogether.
By keeping a few tricks and tips in mind, you can start saving up while starting off your career. Below, we listed eight money saving tips perfect for young professionals like you.
1. Live within your means
One of the simplest tips is simply living within your means. After all, when you only have enough money to go by for yourself, it almost seems impossible to spend more than what you earn.
Unfortunately, this isn?t always the case. When you have access to a credit card, as well as family and friends who are too lenient to lend you money whenever you run short, you?ll definitely end up in debt in no time.
Don?t envy your colleagues who probably earn more and have different spending habits than you. Just focus on yourself and spend money based on your own means.
2. Stick to a budget
One of the most common mistakes young professionals make is spending without limit ? or at least, without a set budget.
If you?re still not creating and sticking to a budget, you?ll normally spend beyond your means and run out of money every now and then.
To avoid this, keep a close track of your budget and never spend more than what you earn. By creating a budget, you?ll be able to have strong control of where you spend your money, which will eventually allow you to allocate funds to more important purchases of for saving.
3. Track your spending
If setting a monthly budget isn?t working for you, don?t lose hope. One of the things you can do as an alternative is to keep close track of your spending. Doing this should enable you to monitor your expenses and get an idea of where your money is being spent. In turn, this will make you more aware when spending.
There is a constant range of budgeting applications that you can easily install on your smartphone. These apps range in power and functionality, with some doing basic stuff such as listing your spending and graphing it in a pie chart, while some are able to sync with your bank accounts to provide you with accurate financial updates every time.
4. Build an emergency fund
One of the most crucial factors of saving up money is a rainy day fund.
An emergency fund will serve as your buffer should anything unfortunate arises. Whether you get laid off from your job or when medical emergencies arise, your emergency fund will cover for your immediate financial needs without having to turn to your family and friends.
5. Pay off your debt
It would be impossible to save up if you remain in debt. Staying in debt means you?ll always have a portion of your salary dedicated to paying off your debt instead of adding to your savings.
Before you splurge or even before you start saving up, prioritize getting out of the red first, especially if your debt is subject to high interest rates. Make sure that your debt is removed first before you start saving up.
6. Prepare for retirement
There is no such thing as preparing too early.
Even if you?re still just starting your career, it?s good to start thinking about saving for your retirement. In fact, the earlier you do it, the easier it is on your budget.
Inquire with your employer how you can avail of an Individual Retirement Account or a 401(K) retirement account.
7. Set money aside for savings
One of the easiest ways to save money is by creating a savings account. With a savings account, you?ll be in great control of your finances.
The Dollar Genie says that a savings account can be used to earn interest from the bank, have separate safe-keeping for your emergency fund, as well as help you manage your future larger investment goals.
Truly, a savings account is something you should aim at having while you?re still a young professional.
8. Start investing your money
In order to achieve financial freedom in the future, you should be making wise investments as early as today. By investing your money today or as early as you can, you are enabling time and money to work in your favor without exerting too much effort.
Just make sure to do extensive research to identify the most suitable investment type for you.
Starting down the road to financial freedom
While these tips are only meant to help you start saving money, taking each step with care will eventually help you achieve your financial freedom. This will prepare you for any financial hurdles that may come your way and set you up for a bright and comfortable future for you and your family.