Hello graduates! I’ve had a few emails from graduates asking me what I think are the most important tips for living a frugal lifestyle recently. I LOVE that!
First off, good for you for starting off with a frugal mindset! It took me a LOOONG time to get here.
Secondly, I am by no means an expert. As I have said many many times…I started this blog because we were STRUGGLING. We still have times of struggle. Frugality is not something that comes naturally around here. I’m envious of people who get a kick out of diverting 75% of their income to their savings account every month. To me that would be complete torture.
That said, I’ve learned a few things over the past 10+ years of “adulting” and I’d say these are the 5 things I WISH I could go back and tell 18 year old Heather.
Automate your savings – My church has a saying, “Automate the important”. This is in reference to tithing, but I also think it’s important to automate your savings as well. The rule of thumb is to build up your “emergency fund” to $1000 (Dave Ramsey) and then from there work on 3-6 months of living expenses and then finally a year’s worth of living expenses.
You will thank yourself for taking care of this early on in life. This doesn’t mean it won’t be an ongoing process (after all, it’s an emergency fund…you will likely have many emergencies in life! Not to mention, as your income goes up and you get married, have children, etc…your living expenses will also increase), but you can start working towards these goals as soon as you receive your very first paycheck!
Most banks/credit unions offer linked checking/savings accounts and allow you to automate transfers between the two.
Surround yourself with fiscally like minded people – This isn’t to say you can’t be friends with people who have more money than you (or just SPEND more money than you), but be wary of following in their lead. I personally got into trouble with this a lot. Many of my friends were still receiving money from their parents after we graduated and were able to go to concerts, out to clubs, etc without blinking an eye. I was supporting myself and it was hard to keep up.
Find other friends trying to be financially responsible and make it fun! Find free things to do in your city, cook together and go thrift shopping!
Create a budget – The most important thing you’ll ever teach yourself is how to stick to a budget. I’m telling you, even today this is something I struggle with! You have your savings, and your bills, and your charitable giving and…then maybe some fun? It can be difficult to prioritize what is fun over what keeps a roof over your head. It’s hard for EVERYONE.
This is why you need to budget! Please, please be realistic about your budget as well. Incorporate an entertainment and clothing line item. You will shop and you will go to the movies. Do it guilt free by working it into your budget!
Live below your means – Notice I didn’t say to live withIN your means. Nope. Live below your means. This is SO hard. If you start off this way though, your lifestyle can improve with every elevation in job status and every performance raise. You aren’t destined to Ramen noodles for the rest of your life.
If you start off with a Lexus car payment though (even if you “can” afford it), it’s REAL hard to drop down to Ford budget. Don’t try to live like the Jones’s. They’re broke and in debt.
Make sure you understand credit, whether you use it or not – I got my very first credit card when I was 18. I charged that baby up and then stared at the bill in shock when it came. I had NO idea how interest was calculated. I had NO idea what interest rate I had even agreed to when I signed up for the card. The bill was like reading a foreign language and I remember very vividly setting it aside and NOT paying it because I was overwhelmed (I eventually paid it. Late.).
Clueless. I was completely clueless and my credit got away from me VERY quickly. It’s a sinking ship. Promise me you will know everything about credit cards before you ever sign up for one? Promise me?
BONUS: Read and educate yourself about financial matters. You might be young, but that’s the best time to start planning for retirement, saving for college for your children, etc. A few books that come highly recommended for graduates:
Finally…this is an ongoing process. Financial education NEVER ends. Those 5 tips up there? Still struggles for me. All of it.
Financial responsibility (like math, and science and cleaning) does not come naturally to me. I constantly have to work at it and I constantly make mistakes. I love saving a buck or two, but boy do I love spending three!
It doesn’t matter though. Even the rich have to budget their money and even the rich have to have an emergency fund. The gist of this is that it never ends. The sooner you embrace it, educate yourself on it and LIVE it…the happier and fuller and RICHER your life will be!
Do you have any tips for graduates? Comment below!
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