Why I started a savings account at the age of 20

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If you’re a college student or a recent college grad, you probably don’t have excessive amounts of money lying around for you to use at your leisure. We have embraced this as part of being a college student/recent grad. And that’s okay, we’ve been/are focused on getting an education, something that in itself is very valuable.

But I don’t think being a college student or someone who just graduated justifies us blowing through the little money we may earn. Whether it’s on daily Starbucks, clothes, regular lunches out with friends…all this can add up to a somewhat significant amount of money over time. It may not seem like your $3 drink is a significant cost but a few of those a week, every month, is.

A few weeks ago I was reading a book on organization called, Now What by Diane N. Quintana. I received it as a gift for gradation from my awesome, (and very organized) godmother, and though it doesn’t seem like the most exciting gift, it has been extremely helpful.

Reading the book made me realized how little attention I gave to my finances. As someone who doesn’t have too many big expenses at the moment (such as car payments, house mortgage or big grocery bills), or a large income (let’s be real, I’m an intern), it didn’t seem necessary to set a budget.

Taking a look through my spending in my bank account app quickly made me realize exactly how much not being careful with my money was costing me.

A bathing suit company from which I had ordered a bathing suit in May was taking $40 out of my account every month without my realizing it. After some investigation it turned out that when I agreed to buy a bathing suit from this company at a bargain price, the ‘small print’ had said that I was agreeing to becoming a ‘VIP member’ which enabled them to take the $40 monthly from my account.

Seriously, who spends $40/month on bathing suits?

Anyway, I was able to get most of the money back but the lesson I learned from this little mishap was more valuable. I realized that saving money and making a budget (even if you make minimum wage) is smart and very beneficial.

I now have a savings account in which I put a portion of every pay check I get. I also have cut down on some of my spending, here are some tips that have helped me to do so:

Keep track of what it is you are spending your money on.

It’s an eye-opening experience to realize exactly how much you’re spending without really thinking about it. For me it was mostly coffee and meals out. If this is the case for you too, I’ll tell you how now you have a chance to save some more money.

Start a savings account.

I always aim to save most of my paycheck, but actually setting aside money that I know I can’t touch makes the difference between ‘aim’ and ‘achieve.’ If you don’t have a savings account or don’t use it, I highly encourage you to do so. Have the account and decide how much you will put in there every happy Friday that you get a pay check. It is the best feeling to know that you have a little ‘cushion’ that you can use in an emergency or when you want to make a serious purchase such as a house or new car.

Control your spending.

When it comes to items you don’t need, such as meals out, coffee and clothes, there are ways to enjoy these little luxuries while still saving money.

  • Decide in advance how much you are going to spend on each of these. Be realistic, base this on what you learned from your spending analysis. Aim for less than you have been spending (the goal is to improve) but don’t be overeager and aim for $20 a month on meals out…not gonna happen, promise.
  • When it comes to clothes, look through your closet and make a list of items you’re missing/really want and budget your money for only those items. Avoid going into stores if you tend to buy on impulse. Be really picky about the clothes you buy. Make sure you LOVE the item and sleep on the decision to buy, even if you say you have to have it, you may be surprised the difference 8 hours can make. When it comes to clothes, quality>quantity, 100%. (But again, be realistic. I’m sure Prada is better quality than Loft outlets but you won’t see me buying their stuff any time soon).
  • To avoid eating out as much, always bring your lunch and plan your breakfast in advance so you’re not tempted to grab something on the way to work. Having a meal plan can help you to spend less money on groceries and eating out by helping you buy exactly what you are going to eat.
  • When you eat out with friends, if you know ahead of time, eat something before you leave the house and buy one of the lighter things on the menu such as a salad or an appetizer. And always drink water!

As much as I love coffee and donuts and croissants and JCrew and the newest Apple product, financial freedom is the REAL (and much more valuable) luxury.

Do you have any budgeting tips? Any help/advice/comment is welcome! Comment below or shoot me an email 🙂

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