You’ve reached the point where you’re about to graduate from college, or you recently graduated. It must feel all sorts of things because this is a one-time and precious thing that opens you to many new doors, including employment and financial independence. And with this newfound independence comes exciting plans like doing and having all the things you’ve ever wanted.
Your 20s may sound like such a long time, but it’s also a determining point that requires you to focus and land on what more or less will be your direction for most, if not the rest, of your life. On the other hand, going here and there with no clear intention will one day have irreversible consequences. Choosing a career path is just one example. If you jump from one job to another with no clear sense of what you’d rather be years from now will not only breed regret but a smaller financial capacity in your older years.
The same is true with how you manage your money. Just like your career, your money should be nurtured and grown. While it’s okay to indulge in your hard-earned money from your first job and enjoy your youth while you can by buying and paying for new experiences, it’s wiser to save to afford things that are more meaningful rather than superficial.
Adulthood requires you to accommodate more responsibilities in your life, from paying bills, taking care of your health to starting your own family. It’s only understandable for you to feel like you’re depriving yourself of the good things. But, we’re here to show you that does not have to be the case. Here are just some of our tips to help you save your money as early as now and reap the overflowing benefits later on.
Planning Your Mortgage
As early as now, work your way to getting your own house. Aside from land, a house is a long-term asset that, more than usually, appreciates over the years. If the thought of getting a mortgage intimidates you being young yourself, reputable mortgage companies are more than glad to educate and assist you in every step of the process.
What you can postpone for later is buying depreciating assets such as a car financed with a loan. Car models pop out one after the other like pancakes and would only definitely deplete the value of whatever model you bought as if maintenance costs weren’t enough of a burden. There’s nothing wrong with the commute. If anything, it’s superior to driving a vehicle that’s practically not even yours yet.
Applying for a credit card is another unnecessary burden you could put upon yourself. Getting a hold of one is caving into the illusion of financial security that your paycheck supposedly provides. But, all it does is bury you in debt you wouldn’t have incurred if you spent within your current means.
Budgeting Your Expenses
Although this term is overused in the financial world, one cannot deny that budgeting is one of the best ways to stretch that paycheck until the next and even set aside a fixed percentage to accumulate big savings later. You usually only realize the importance of budgeting and that a couple of hundred bucks could only afford so much after moving out of your parents’ house.
So, as much as possible, stick to a monthly budget, allocate an amount for every routine and essential expenses like food, utilities, rent, insurance, and soul-nourishing expenses which, in contrary to impulse buys, are those things that will help you grow spiritually just like self-help books, a yoga mat, or even professional development courses.
Allocating a good 60 to 70 percent of your monthly paycheck for these essential expenses, avoiding impulse buys, and practicing delayed gratification will ultimately lead to painless savings. You should also seriously heed what financial experts say, save an amount that will sustain you for a maximum of six months if you’re planning to leave your job to find another, for instance.
You know what financial experts also say about not undermining the power of compound interest. Investing a principal amount as small as the sum of all the cash you received as a gift for graduation for a retirement plan, for instance, and paying smaller monthly or annual fees is a good start.
Commit to these constant yet painless payments 40 years or so rather than starting late and pay burdensome amounts to cover for the short period leading up to retirement. See your total investment grow by as much as 500%, hopefully enough to sustain you during your retirement years and provided you’re not in bad health.
Life is a series of investments. It’s also worth remembering that you cannot take back lost time, making money a nonrenewable resource. Likewise, the more you put off temporary pleasures, the more gratifying the rewards are in the end. The earlier you realize these things, the more fruitfully you can live life.