Like many post-grads, once I started working full-time, I was overwhelmed by the newfound income I was bringing in every two weeks. It seems like the perfect time to start spending on all the purchases you’ve been coveting, and a steady paycheck seems like the gateway to endless fun and frivolity. The future, and all the events you might need to save for, seem so far off, so the temptation to buy shoes, pick out an entirely new wardrobe, or lease a new car mounts. However, the way I see it, your 20s are the years when you should be saving up. Our generation faces financial struggles such as student loans, an economy still in recovery, and a job market that’s more competitive than ever. (Not to mention, the younger we invest, the more valuable these investments will have the chance to become.)
So while spending on all of the things “adults” need may seem appealing, especially after you land your first post-grad gig, I’ve learned that I need to push myself to save whenever possible, and here’s why:
1. It’s important to develop a savings strategy.
I was lucky enough to land a job straight out of college, and it was all the more exciting because I had to move to a completely new city. I ended up using upwards of $5,000 on the move, furniture, and decor alone. Lifestyle inflation got the best of me, and I justified it all by saying that my purchases were contributing to my overall well-being. If I had been more strategic with moving and furniture costs by setting a short-term goal beforehand, I wouldn’t have wasted as many paychecks as I did.
Needless to say, I’ve learned my lesson. For my next move, I started saving up six months in advance so that I’d have a comfortable cash cushion that could help me pay the security deposit, moving/cleaning costs, and the costs of any necessary furniture and appliances. I’ve also learned the necessity of having both long-term and short-term goals. Sure, saving up to move, or to make a down payment on a car is good, but I don’t want to lose sight of saving for retirement also. The earlier you start saving a percentage of your income in a 401(k) or an IRA, the more money you’ll have when you retire.
I like to think of myself as carefree (read: careless), so I don’t like having rigid rules in place when it comes to how I live my day-to-day life. It took me a while to understand that saving my money is key to understanding the relationship between time, work, money, and possessions. Your lifestyle actually becomes more carefree when you become strategic about handling your money, because there’s one less thing to worry about. Savers plan for the things they really need and want. If you start to cultivate this strategy now, you’ll be able to use your financial-management skills to make better purchases and better investments. Successful savers start strategizing early, know what their goals are, and are willing to work for them.
2. Saving makes you so much more flexible.
When a must-have deal on the item you’ve been saving for comes up, you’re going to want to take it. And this is one of the times when the difference between a spender and a saver becomes obvious. When you’re someone who saves, you have the flexibility to take advantage of an unexpected sale opportunity because you are financially prepared. For a spender to commit to the same opportunity might mean taking out a loan to finance the purchase. The spender may count on the next paycheck to cover the debt, or the one after that, aiming to pay it off eventually.
On the other hand, having a well-padded savings account can provide you with a lot more flexibility when purchasing your big-ticket items, like a winter coat or a couch. By living below your means and saving up for the unknown, you’re better equipped to take advantage of opportunities as they arise. Interestingly enough, the more I watch my savings grow, the less inclined I am to spend it. I’m a lot more deliberate when it comes to making purchases with a bigger price tag now. Because I started out spending money as it came in (and realized quickly that it left me with very little), I now make a point to save well so that I can spend purposefully on items when I need to.
3. It’s crucial for financial independence.
As a relatively recent college graduate, I know quite a few people my age who still depend on their parents for a lot. My parents helped me a lot when I first started out as well, especially with my expensive move. I really hated the fact that I had a full-time job, but still leaned on my parents for financial support. This was another huge reason for me to ramp up my savings strategy because the earlier you start saving, the more independent you can be. I am now proud to say that I’m well on my way toward financial independence from my parents.
4. Savings are essential for anyone trying to follow their dreams.
You may think spenders get what they want in the form of instant gratification, but having the ability to cushion yourself in an emergency allows you to go after what you really want. More than 40 percent of millennials are not saving because they want to treat themselves more often. While treating yourself is worth it once in a while, making it a frequent habit implies that you aren’t building up an emergency fund. In my opinion, saving money is crucial to building the life you want. If you want the ability to take some time away from your job, buy a home, or start your own company, you’ll need the money to do it. In order to chase your dreams, you have to save enough to enough to afford to pursue them.
Anum Yoon is the founder and editor of Current On Currency, a personal finance blog for 20-somethings who can’t adult well enough to be savvy with their money.
Image via Unsplash