I have a financial plan once I am out of school, of basically getting a job, and saving as much as I can, preferably 50% but 30% works also. Especially if I would live with parents. Only problem is the plan could be derailed if I were to pay rent for my home, but even then, it's the habit that makes you rich, even 10% off the top works while trying to stop the useless expenses. And then I will have the money to invest.
In my perspective I think, saving or counting every expense is difficult, so instead making a budget and restricting yourself to it is better.
You could probably track expenses and save on small things. But how often would you do that. That's why a budget works.
What do you think about paying yourself first? It is a savings tactic.
byu/Ok-Nobody-9505 inFrugal
Posted by Ok-Nobody-9505
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Making a budget and sticking to it is a great idea, and would not argue against it. What you may be missing with tracking spending is that it makes it really obvious how those little things can add up.
And yes, pay yourself, really your future self, first. Before I ever see my paycheck a chunk has gone into a 401(k) and every week another chunk is automatically transferred from my bank account to a money market account for next year’s retirement account investments.
Many employers can send your paycheck to more than one account using direct deposit. One of the easiest ways to build up your savings is to have your paycheck automatically spilt. So the first X% goes into the savings account (which should be a high yield savings account) and the rest goes into your “working” account that you use to cover your regular expenses. Manage your budget to the money in the working account and don’t touch the savings account.
Once you have enough in the savings account for a robust emergency fund you can consider investing some of that money, but first step is to make sure you’ve got a solid emergency savings fund so you can weather a job loss or other challenge.
Make it so you don’t even have to think about the act of putting money into savings.
That’s what I’ve done for years on high, average, and low income. No matter what, I save off the top and live on the rest. This way I’m always saving no matter how much or little I’m earning.
I still don’t save enough but here’s my take on saving and spending. If you give $100 to a friend, you have to earn $500 to support that act, assuming it’s from your savings and you save 20%. If you only save 10%, then you have to earn $1000 to support that act.
When we are young, we try out various tactics and see which one works for us.
It’s important to celebrate small wins, and to expect mistakes, since it’s all new. A new job, a new budget, etc.
r/personalfinance has good wikis to read.
For the last 7 years, as soon as I get paid, a portion of the check goes straight into savings. I don’t even see that money.
As far as tracking expenses go, everything I buy goes on a credit card, it gets paid off on the 5th of every month. I know exactly how much money I spent the month prior, just look at the balance.
Read the wealthy barber. Ruke #1 – pay yourself first. At least 10%