Hello I am posting here because I want to learn how to manage my money better and get started on saving.
I am 20 years old, live with my parents, I have a shitty job with bad hours and no savings. I have a negative 1k balance on my credit card…(I know)
It is a student card with discover and they aren't crazy about paying it back, my credit score is still good at 704 so I'm not super worried about it, I've just been paying the minimum amount since I have no late fees which is about 50 bucks by the 1st of every month.
I don't pay rent, only have to pay my car insurance and phone bill every month it's only $55. I make roughly 300 bucks a month, I make $18.15 and have an average of 15 hours a week at my job. I've been looking for a second job but haven't heard a thing back so I'm stuck with this for the time being.
I want to open a hysa but I don't know if that's the right way to go, I know nothing about money savings or what any of the vocabulary means and I just feel completely lost on what I should do. I don't have anyone to ask or teach me and I just hope to get back on track so I can start my life with financial security before I'm too old that it gets more embarrassing.
How to start saving with 0 savings and 1k debt as a 20yo
byu/lnwnl inpersonalfinance
Posted by lnwnl
6 Comments
You have no bills. Stop paying minimum and just pay off the CC debt
Start small. Track where your money actually goes for a month, even just using Google Sheets or a budgeting app helps. Once you see patterns, you’ll instantly notice what’s unnecessary and where you can save to start paying off your debt. Tracking is what works best for most people in my experience.
After that, you can get more strategic.
I like using prepaid cards or digital gift cards to set monthly budgets for things like groceries, outings, or travel. When the balance hits zero, that’s it for the month. They are a good alternative to credit cards as they do not affect your credit score.
You need to figure out your expenses and what your REAL monthly income is. You say you make $300 a month, yet, you work 15 hours a week at $18 bucks an hour.
15*18 = $270 a week
4 weeks in a month = $1,080
You pay around $200 in taxes, medicare, and social security a month.
Your net is $880.
Of course this is all a guess and far surpasses your $300 a month.
You buy groceries and food, OK, that confuses me.
Your Gas is $100, is that a week, a day, a month, a year? You do a LOT of driving if that is $100 a week.
You pay for a phone and car insurance. No idea what that costs.
You have a credit card bill of $1000, which means you have a serious spending problem.
I think those are your only expenses but only you know.
When I started out I was making $1.25 an hour. Somehow I saved up money.
As other have said, the $300 a month doesn’t square with you earning $18 per hour x 15 hours a week.
If you truly only net $300 each month, you’ll barely be able to save anything meaningful and need more hours, a different higher-paying job. or a second job.
If you actually net more than what you told us, then you’re overspending and need to track where that money is going. Either way, pay off the credit card debt aggressively and start saving even if it’s a small amount. $25-50 is a good place to start. Don’t let perfect be the enemy of good. Put it in an HYSA that earns 3% or above like American Express.
Step 1 in saving money is to spend less than you earn. You don’t provide a lot of details, but I’d guess that you’re going to need to earn more money if you want to start on building some savings.
Given that your hours are inconsistent, and that you are a student, check with your school to see if they have a work/study program, or even just jobs for students.
As others have noted, the first step is to figure out EXACTLY what your fixed expenses are. They are your base. Anything beyond that is discretionary, meaning that you do not have to spend it.
The fact that your paycheck is irregular makes things difficult, but not impossible, if you keep your spending dependent on what is needed, not what is available.
You can open a HYSA without putting a ton of money in it. I’m on a fixed income, and I get my checks deposited into an online HYSA. I transfer what I need for bills into the connected checking account, all through the app.
That way, as interest is considered daily interest, even a little left between checks will earn interest. A HYSA is simply what its name implies: a high yield vanilla savings account. They don’t need to be “fed” large amounts on a regular basis. They simply offer substantially great interest than the typical bank in the US.