Saving Money

Alright, it’s a topic that everyone brings up and that everyone seems to have some trick or talent for doing. But let’s face it, saving money can be hard. Especially if you’re a young adult living on your own for the first time. Below, I’m going to outline the simple steps you can take to save roughly 10 percent of your income every year.

Look around for the best savings account you can find.

Research the different banks for the best interest rates. You don’t need a fancy account. Just a plain Jane, no bells-and-whistles savings account. Check into the bank’s history. Ask questions like: How long has this bank been around? Do they have a good track record of good customer relations? What is the minimum balance they require in a savings account and how much do they require for you to open an account?

After you find your bank, you’re ready to open an account.

Unless you don’t have the minimum amount of money to do it. That’s a problem for a lot of people who are just starting to save. If you’re lucky, you have just enough tucked back to go ahead and open the account, but if not, you can start saving now. Find a tin, jar or really any empty container. Grab up the duct tape and wrap that container tight, leaving a slit for you to put money in. It’s basically a piggy bank that’s going to take a lot of work to get into. Keep track of how much money is in there, and once you have enough to open an account, take the piggy to the bank!

Start saving.

Here’s where the math comes in. It doesn’t matter if you get paid once a week, twice a month, or monthly; it all works the same. The only thing that changes is how often you’ll be making deposits. Out of every pay check, take out 10 percent and stash it away (either into your savings account or you temporary piggy bank). Here’s how the math would look: 100 – 10 = 90. You keep $90 and put $10 aside. Most people aren’t going to have a perfectly round pay check. So round down to the nearest 100. Let’s say you get paid $246. Take that and round it down to $200. 10 percent of $200 is $20. Take that $20 and stash it back.

Save unexpected money too.

Birthday, holiday, and just random windfall cash is awesomely great. Sometimes it comes just when you need it the most. If you’ve got car repairs or another needed expense, use that money to help soften that cost. If you are happily without those expenses, when you get the extra money, stash back 50 percent of it. Grandma sends you $50 for your birthday, stash back $25. Unexpected $100 bonus at work, save $50 of it. I know it doesn’t sound very fun, but it helps.

Don’t touch it!

The biggest enemy to your savings account is you. Don’t withdraw anything out of that account unless you have to. Wanting a Friday night out on the town isn’t a need. Having to pay for a new set of tires on your car because the old ones are about to shred is a need. Wanting the redecorate your home is not a need. You broke your finger and need medical attention is a need.

Of course there are going to be things you want to use that money for that you shouldn’t.

No worries, you can save to get your wants, too. You just have to do it differently and away from the main savings account. You can set extra money aside by bringing back the duct tape piggy bank, opening a second savings account, or just tucking it into a second pocket of your wallet. Here’s how: After you’ve paid your bills, set aside your 10 percent into the savings account, and bought all your groceries and necessities that you’ll need, take what’s left over and tuck it back. If you want, tuck half of it back and keep half for small expenses that might come up.

Follow through.

After a year, you should have a nice chunk of change in your savings account. Math time: If you average $1k a month, then by the end of 12 months you should have at least $1200 in savings. That’s leaving out the interest that built up over the months. At this point, it’s up to you what happens. You can keep that savings account and just keep stashing money back into it, you can take that money and invest it in stocks, or you can invest it some other way. I can’t and won’t tell you what to do from there, aside from keep saving.

Keep putting money into that savings account.

No matter what you do with the money at the end of the year, keep putting money into that savings account. Week after week, year after year, set back 10 percent of your check and build up savings. At the end of the year, you can invest it in any way you want, but having that savings account that’s more easily accessible during the year will help.

Everyone can tell you that unexpected things happen. Storms tear up roofs, dryers stop working, bones break, and cars stop running. All of these things and more are going to happen—and you’ll have to find a way to pay for it. Having a savings account helps. With it, you can maintain your life a little better during unexpected happenings.

Investing the money at the end of the year is really a long term goal for either retirement, a down payment on a house, or something big that’s going to better your life.