I will pretend to know what I am talking about when it comes to almost anything. Call it lying or social survival, but I can fake my way through many different types of expertise.
The one thing I will never, ever, ever pretend to know what I’m talking about, however, is how to save money.
As an almost-28 year old, saving money is an area that I would very much like to improve in, but the advice of real experts in this area overwhelms me every time. Of course they’re telling me to stop buying $60.00 throw pillows with my friends’ parents’ faces screen-printed on the covers as a joke, I think to myself. They’re experts and/ or grown ups. What about the financial civilians closer to my age? I’d rather know how they figured it out.
How did my money-savvy friends manage to save up? I know some people who have stored away enough money in five years post-graduation to buy a HOUSE.
So you know what I did?
What any responsible person looking to seek financial advice would do: made a Facebook status. Below, the most helpful results:
Heather Baxter, 28, Former Engineer-Turned-Yoga Instructor
“The following tricks helped me pay off five years-worth of student loan debt in five years while living in Australia and Boston, moving five different times, traveling to see family and friends and occasionally splurging on new clothes… all while not eating ramen.
1. If you have debt, don’t consider your money your own. Every dollar of debt you have should be viewed as a negative dollar in your bank account. So even when you have $1,000 in your savings and want to spend it on a trip to Florida, remind yourself that you are actually $100,000 in the red and that $1,000 is already owed to someone else.
2. Never spend more money than you make and have. Unless needed for an emergency, using a credit card or small loan to pay for things you want is disastrous. This should apply to all things: clothes, cars, dinner with friends.
3. Marshalls, TJ Maxx and clearance racks are your friend. Nobody needs to know.
4. If/when you get a raise or promotion, don’t change your lifestyle to fit your new discretionary income. Immediately assign that increase in your paycheck to a savings or 401k. Feel free to celebrate with a nice night out but, after the celebration has subsided, go back to life as usual. You lived on that income before and you can continue to do so.
5. Consider not consolidating your student loan debt. If you do out of necessity, read the fine print. More often than not, when you consolidate, you will owe the student loan provider all interest that should/would accrue over the agreed upon term EVEN IF you pay off your loans early.
6. View your tax return as just that: returned money. Your tax return isn’t found money, it is earned money that was incorrectly distributed. So, instead of a new TV, that money should be used like your typical paycheck is: to pay bills.
7. Use gifted money as your fun spending cash. You will go crazy if you never have a night out, but try to solely use that “found money” and not your personal earned money.
8. Last but not least, remember that when you pay off a loan/credit card, your cash flow will increase. It will hurt when you make a large payment on any debt, but eventually the money in your paycheck will be yours and ALL yours.”
“I always thought that being financially savvy meant 1) making as much money as possible and 2) spending as little as possible. A friend totally changed my perspective when he taught me the importance of giving to charity: it cultivates gratitude, humility and, believe it or not, a great sense of abundance (‘Wow, I have enough that I can share!’). There is even a spiritual concept that says not keeping all of your income for yourself makes room for more to come in.”
Emily Sanford, 30, Senior PR Manager at Tibi
“If you want to buy a house because you’re sick of renting, speak with a mortgage professional to determine how much you can afford based on your monthly income and the minimum down payment amount. Once you know that number, set aside a certain amount of money each month in a high-yielding mutual fund with low risk or a separate account outside of your everyday bank account — it’s easy to spend the money if you can see it.
My husband and I figured out how many months we’d need to put away a certain amount of money in order to reach our goal down payment. For those few months we lived on a very tight budget, but after just a year we had saved enough for a down-payment on our first home.”
Sarah Hewett, 27, and Jahnel Madarang, 28, Travel Bloggers
“We quit our jobs to travel the world and start our blog. We saved up $30,000 in 6 months between the two of us in order to actually make this happen. The best piece of financial advice we have for 20-somethings is to figure out what you want and prioritize that above everything else you do. Change your frame of mind to think of everything as a value related your goal. For example: “Taking an Uber out tonight will cost me $10, which is one or two nights of accommodation in Central America. That means for a weekend of Uber rides, I can extend my trip for 5 extra nights!” Once you think of it that way, taking the bus doesn’t seem so bad.”
Lisa Fetterman, 28, Co-Founder at Nomiku
“The best money advice I’ve ever been given was through a Y Combinator colleague of mine, Saleem Khatri, the CEO of Instavest. Instavest helps ‘regular people’ invest. When all of my stocks went down in January, he told me, ‘Do not panic sell.’ Great advice, and now my stocks are back up.”
Emem Offong, 31, Senior Digital Experience Designer at Mental Floss
“I recently got serious about my financial health. Thanks to a new job, I found myself with extra money and I became obsessed with growing my emergency fund. Previously, I had taken advantage of my job’s 401k options but I never really had enough money saved for emergencies. So, late last year, I did a personal finance review to figure out exactly what I wanted my goals for this year to be. A friend introduced me to Digit and I started using it as a second savings account. Because it’s separated from my bank accounts, I don’t miss the money. And it’s nice to login and see how much it’s grown every week. I also send money to Digit when I unexpectedly save money. For instance, if I end up buying one beer instead of 2, I send the extra 7 bucks to Digit.
I use Mint to track and manage my budgets. I have the usual categories of recurring bills (gym, electric, savings, etc.) and then have an all-encompassing budget category called “personal spending” where everything else goes — groceries, nails, laundry, shoes, clothes — and I use separate tags to track them. So at the end of every month, within my personal spending category, I can tell you exactly how much I spent on laundry or meat or alcohol. Mint also tells me when I’m approaching my budget limit which helps me decide what activities to go to and what to turn down.”
Rebecca Murphy, 27, Associate Merchant at Jonathan Adler
“When I first started babysitting, my parents made me take 10% of the money I made and put it in savings which seemed like a joke at the time but I felt like a Rockefeller when I got to college and had all of this money in savings that had collected interest. I still practice this all these years later because those little amounts can add up.”
Shauna Leal, 27, Emergency Dispatcher
“My work paycheck gets directly deposited into my Bank of America account, but because I have a Bank of America card and there’s Bank of America ATMs everywhere, the money gets used up quickly. So, to help save money, I opened a bank account with my city’s federal credit union (in SF; it’s great for loans and has the best interest rates) and set up my paycheck so that $200 of it gets immediately deposited into the credit union account. Because credit unions aren’t on every street corner, I rarely go and take money out of that account. I also don’t have a debit card for that account, so the money just keeps stacking up.
Sofia de Goytisolo, 24, Corporate Banking Analyst
“It doesn’t matter how much you save; what matters is that you are saving something on a consistent basis. I set up automatic transfers from my bi-monthly paycheck to my savings account so that I never see the money. Once you get in that habit and the number in your savings accounts starts growing, you won’t want to stop.
It’s also important to set financial goals and make budget plans. I have everything laid out in a spreadsheet – my projected savings for the year, my monthly expenses, etc. Things don’t always go as planned so don’t give up if you’re not saving as much as you planned. Don’t let one big spending day or week break your budgeting routine altogether. It’s all about staying consistent, like if you are trying eat healthier, you can obviously still have the occasional donut without letting it derail all your hard work. Every day is a new day, so don’t dwell on the past (or what your bank account looked like pre-splurge).”