Ahhh, post college life. There is truly no time like it. You’re used to living off of ramen from your time in school, but you’re earning all of this cash now that you’ve got a big kid job. All of this is great, but make sure that when you’re living it up in your 20s (there’s no better time for living it up!) you keep your future in mind. Because you just left college, you’ve already got a head start because you’re used to living cheap.
When I was in college, I made about $6600 per year, and about $10,000 per year when I was in grad school. My first out of school job was for 39,000! I felt like a millionaire, but I kept a lot of things the same. Here are some simple ways to save some money while still enjoying life in your 20s:
Do not spend a ton of that new-job money on a fancy new car
The car will lose value quickly, and you probably won’t even have gotten to middle management before you’ll need to replace it with something more sensible. If you need a car, look into used options that wont break your budget. I can tell you that there’s nothing more disheartening than saying “sorry guys (or gals) I can’t go to that awesome event/show/night out because I have a gigantic car payment”.
Slightly upgrade your standard of living
Probably like you, the places I lived in college were not the nicest (the number of doors in one of the houses shrank as the year went on). Now that you have all this money, you may be tempted to sign a huge year lease on a super new, super nice apartment in the hip area of town where all your peers live. Don’t ink that deal right away, or all by yourself. You’ve lived with roommates for this long, consider keeping the ones you have or finding a new one to share some costs. All the better, you’ll have someone to help you split the bills (and clean the house!) when you don’t feel like doing either. You don’t need to continue living in a dump, but don’t go crazy either – you’ll thank yourself later.
Use your technology wisely
The cell phones, computers, and other gadgets you are accustomed to using every day are expensive, and so are the services that are essential to make them worthwhile (phone service and internet). However, you can find affordable internet for your business or home such as MegaPath DSL to save you some money. Make sure to take care of your tech gadgets so you can get as much life out of them as possible. I’ve heard plenty of stories from crazy nights where a smartphone, tablet, e-reader or the like has gotten misplaced. Those can be hugely expensive to replace. I surely don’t want to pay $500+ to get a new phone when I’m stuck in my contract! I’ve been able to avoid this for almost 3 years, which has saved me at least $200. I’ve done it by manually upgrading my phone’s software.
Don’t lie to yourself when budgeting
When I was first out of school, I set a totally unrealistic budget that had me spending $10 per month on dining out and $25 per month on alcohol and bars. This was totally unattainable and I quickly found out. I kept beating myself over the head for it, and sulked when I was out with friends because my budget said that I couldn’t have another beer. Finally, I relented a bit on myself and changed the numbers to a far more reasonable amount. Don’t make yourself miserable just to save a buck. That could become a self fulfilling prophecy because your friends will stop inviting you places because you’re miserable to hang out with! Sure, it’ll save you money, but you’re supposed to be living it up in your 20s, not sulking!
Make it automatic
When I got my first job, my salary from the year before increased 4 times! I couldn’t believe it, and didn’t really know how to handle all that extra cash. I focused on paying off my debts, but even as I was doing that, I was slowly saving up money every month. I figured that $100 per month was large enough for me to watch my savings grow quick, and small enough that I wouldn’t really miss the money in light of my recent huge salary increase. My only regret is not putting away more. My account is growing at a healthy clip now, but it could be even bigger had I saved more than $100 per month. To make this easy on yourself, open a savings account, and tell the people in your HR department that you’d like to have a portion of your check deposited into the savings account. You don’t even see it, so there’s no chance you can spend it.
These five tips helped me navigate my post college years, and I’ve been able to save a boatload of money by following them. My finances are in a lot better shape, and now that I’ve gotten to a place where I need the cash (lots of home upgrades), I actually have some money saved for the upgrades and I don’t even feel like I had to sacrifice for it.
Readers: what financial tips do you have for people in their 20s? What has saved you a lot of money?
Image by crazytales562 / flickr