A few months ago the thought of walking across that commencement stage may have left you feeling anxious with anticipation over the prospect of leaving your protected college bubble. And now, as you’re quickly becoming acclimated with the “real world”, there’s a good chance you’re sporting your best grown-up outfit and hoping if you dress like an adult, feeling like one can’t be too far off.
If only you had a bank account to match those #adulting aspirations.
Well, one obvious way to get there is to start saving. But, given the amount of debt you’re likely lugging around, the thought of stashing away cash probably feels impossible.
The good news? While you may not believe it now, growing your savings doesn’t have to be hard. Here are nine money-saving tips to help you start saving, even if you’re still eating college-kid meals (ramen noodles anyone?) in order to make ends meet each month.
1. Know your cash flow
Yes, this is a dressed up way of saying, “have a budget!” Understanding income minus bills and debts equals money to spend provides the bedrock of your ability to both spend and save.
Sure, there’s all the talk about paying yourself first, which is important, but it doesn’t supersede paying the bills. Writing down how much money you need to pay your bills and debts can help you figure out where to slash unnecessary expenses or unearth items you didn’t realize you were still automatically paying each month.
2. No-fee checking account
Once you know your cash flow, make sure you’re treating those dollars right. One way is to avoid paying bank fees. Plenty of simple, no-fee checking accounts are on the market today.
There’s no reason you should be required to have a monthly minimum amount or pay a fee. Choose an account that allows you to move your own money from savings to checking instead of one that carries an overdraft protection fee. And definitely ditch those annual or monthly maintenance fees.
3. Take advantage of all employee benefits
If you’re one of the lucky ones to have quickly landed a full time gig working for a traditional company, make sure you take advantage of any benefits that have a positive financial impact.
Some of these may include:
- Employer-matched retirement account
- Health Savings Account (HSA) or a Flexible Spending Account (FSA)
- Pre-tax transit card for your transportation needs
- Reimbursed cell phone bill
Check with your human resources department to learn about all available benefits and how you can sign up.
4. Automate your savings
After you pay your bills, it’s then time to pay yourself. It may be tired advice, but it’s common for a reason: it’s important. You should ear mark a percentage of each pay check to automatically go into your savings account.
This helps reduce the likelihood you’ll spend it first. It also makes saving a priority instead of taking an “I’ll save whatever I have left over at the end of the month” mentality.
5. Nickname your savings accounts
While you’re stashing money in savings, you should also consider nicknaming your savings accounts for extra motivation. It serves as a psychological block when you try to transfer money out of your “European Adventure Fund” verses “Savings Account 02934910” to buy whatever strikes your fancy this week. Adding an extra “checks-and-balances” element to your savings life could keep you from robbing your future self.
6. Earn at least 1.00 percent annual percentage yield (APY) on your savings
Many banks are still only forking over 0.01 percent APY on their savings accounts. That means if you have $1,000 in your savings account, it will net you a full ten cents in a year in earned interest. That’s definitely not ideal.
If you put that same $1,000 in a savings account with 1.00 percent APY, you’ll earn $10.05. Save $10,000 and you’re earning $100 in a year. There’s no easier way to save than moving your money to a higher-yield savings account.
7. Refinance student loans
Student loans may be one of your biggest monthly budget busters. If that’s true, you’re certainly not alone. If you’re struggling with your monthly payment, consider putting your federal student loans on an income-driven repayment plan in order to keep the bill at an affordable level. You may even find you’re eligible for a forgiveness program.
Private loans, however, don’t come with such a luxury. What you can do is refinance your loans to take advantage of a lower interest rate. This simple action could shave both time and money off your loan repayment, especially if you can afford to pay more than the minimum due.
Federal student loans can also be refinanced – just be aware this comes with some consequences. Refinanced federal student loans are no longer eligible for income-driven repayment plans, forgiveness programs, forbearance or deferment.
8. Get a side hustle
Getting a side hustle is now cliché advice to millennials, but there’s a definite upside. Picking up an extra job or figuring out a way to monetize a hobby can mean you have extra money to save.
Personally, I freelance in addition to my full-time job. I stash all of my freelance money into various savings accounts in order to meet financial goals quickly.
If you choose to work as a freelancer, contractor or find another side hustle, don’t forget to set aside money for taxes.
9. Actually save money when you think to yourself, “I just saved $X.”
You know you’ve had that moment when you buy something on sale or use a coupon and think to yourself, “Go me, I just saved $5.” Except, did you? Did you actually move that $5 from your checking account into your savings account? Anytime you save a little money, it needs to actually get saved.
For example, if you take advantage of an employee benefit like a company-paid cell phone or monthly public transit card, put the amount of money you would have spent directly into savings.