Are financial behaviors ingrained or taught? Or some combination of both? I don’t know the answer to that question, but my own life can be organized by ever-increasing savings goals.
When I was a little girl, I’d always make sure that I had enough pocket change at all times to buy candy at the grocery checkout. Just in case my mom said no. When I was put on allowance in undergrad, my pledge was to always have $1,000 in my account, no matter what. When I started my first “grown-up job” earlier this year, I had a lofty goal in mind before I even saw my first paycheck: save $10,000.
As of June 30, 2018, I have saved a total of $10,493 and only have plans to build that stash. It gives more than a sense of accomplishment. It’s a sigh of relief and a security. But before I get into the “how,” I want to talk about the “why.” It’s an accepted fact of finance that you need to have at least three month’s living expenses in an emergency fund. I want to buy a house one day. I want to have a cushion. $10,000 is the right start.
Making The Most Out Of The Help I Get
Checking my privilege and my ego at the door. As of right now, I live in my parents’ guest house. After a hectic cross-country move and career change, they offered the house up to me so that I may find my feet. This gradually evolved into letting me stay until my partner and I are to find a house (stay tuned).
There’s more. Part of this arrangement is that I am allowed to put ALL of my “rent” and “utilities” into savings. My parents set a steep price under the condition that I was to pay that amount into savings — a deal that is good for six months (it’ll be up this fall). Let me tell you…it’s not exactly fun having a full-time job and a partner and still living in your parents’ house, and I have contemplated moving out several times. But that would literally be leaving money on the table, and I’m extremely fortunate to be in this position in the first place. You’ve got to know when you’re in a good spot and kick your ego to the curb.
15% Saved By Default
When embarking on this financial quest, I made it a priority to establish savings practices that would not just carry me to my goal but would be sustainable for long-term financial health. One of my favorite financial formulas is the 50/30/20 rule of budgeting. It’s pretty straightforward: ideally, you should be aiming to put 50% of your income into necessities like housing and bills. 30% of the remainder is for your “wants,” like shopping for new clothes, entertainment, and so on. That final 20% goes straight into savings.
After factoring in my cash flow from freelancing, I elected to pull 15% of my salary earnings out for savings at the end of every month. I list this first because it’s probably the easiest. I started to think of my “savings payment” as just another bill that had to be paid and my choice to pay it at the end of the month ensured that my real bills were more than taken care of.
Do The Hustle (The Side Hustle)
I can’t stress enough the importance of a side hustle. Everyone should have one. Don’t care what it is, but in my opinion, you need one. (Note: The podcast Side Hustle School is a great place to learn about different kinds of side hustles. Find your inspiration.)
In addition to my 9-to-5, I freelance as a copyeditor, editing marketing blogs for companies. I get paid a small fee, per article, and it’s tedious work that can still be completed very quickly. I strive to make an extra $100 to $200 a week, but admittedly sometimes I fall short of that goal.
My side hustle isn’t a heavy-hitter, but here’s what it does do: it gives me a consistent and ever-growing money stash. It’s like dropping pennies in a piggy bank. Picking up a single penny and tossing it in there doesn’t have much impact. But do it every day, and you’ll be amazed at what you can make. I picked up my side hustle, earned my money, and then forgot about it until it was time to total my savings for the month. That’s an empowering thing.
Meticulous Spending Management
This is the part that you’ve seen a million versions of. Find ways to save! Cut back on spending. Here were my favorites:
- Being more diligent about cooking at home and (especially) brewing coffee at home. No wasted groceries, better food, and saving BIG TIME by cutting out the daily Starbucks.
- SCHEDULING my shopping. I allow new pieces per quarter. I replace an item, buy a new item for work, and treat myself to one ensemble. This is after analyzing the closet and selling old and unwanted pieces.
- Effectively eliminating the bar and finding entertainment hacks (the fact that I’m a film critic that goes to many free screenings helped immensely).
While living at home has certainly helped my financial situation, 70% of my total savings were a combo of the side hustle and my “paying myself” 15%. I managed to do in three months what my parents basically gave me six months to do, and I did the bulk of it on my own.
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