I used to try to be smart by monitoring my bank account to see how much I had to spend while trying to spend it wisely. It wasn't until I downloaded an app (Mint) that I realized how much unnecessary spending was going on. Mint categorizes each purchase into a designated budget automatically, and I realized I was spending a crap-ton on fast food, restaurants, and bars.
What tools do you use to keep your budget on track?
How did you set your savings goals?
Do you have any tips for students (or anyone with a tight budget) to save a decent amount of money while still paying off loans and such?
When did you open a Roth IRA? Do you think it's wise for a student (who is still paying off loans) to open a Roth IRA?
I appreciate any nuggets of financial wisdom!
Sep 1, '15
I'm a paper and pen kind of girl. I have a set of forms I bought on etsy that I print out and make a mini-bound book out of. I save all of my receipts so that I can total up what I spent where. The very first month I did it, I was shocked by how much I was spending to dine out or get delivery. It was basically about my entire food budget for the month. Doing better now.
My tips for saving money:
Have it automatically deposited so that you never miss it. I don't even see my 403(b) money because it's automatically deducted before I see my net pay amount.
The same with what goes into my emergency fund- my direct deposit allows me to set that $100 out of each pay goes straight into savings while the rest goes into checking. I save $2600/year and don't ever miss it. The only things I've used that savings account for: down payment on my house, home maintenance, and true emergencies (rather expensive ER visit). Once I get up to having 6 months of expenses saved, then I'll work on the IRA or investment account.
Make sure that you contribute enough to the retirement account that the employer matches if they offer it. Mine will match half the amount up to 3% of pay. My minimum contribution then is 6%, but I have it automatically set to go up a percentage point every January 1.
Great way to build credit if used appropriately. Other than when a major house repair well beyond my emergency funds was needed to be able to live in my home (and of course it wasn't covered by insurance), I don't carry a balance for more than 2 weeks. Basically, it's like I pay cash but use the credit card and pay in full every month.
Budgeting that doesn't feel like too much constriction:
I budget in money for fun. During the month of my birthday, I allot money for a spa day. I set a small amount aside for things like dining out, movies, and things like that.
Sep 1, '15
I thing being aware of what you are spending your money on is a great start. I used to use pen and paper now I use an Excell worksheet for tallying my expenses. I agree 100% with maxing whatever retirement your employer will match and I'm also a big fan of the Roth IRA. It is my understanding that the money you put in a Roth IRA because you have already paid taxes on it can be taken out without penalty. As for which debt to pay off first it will depend on the interest rate adjusting the rate if they are tax deductible.
Pack lunches, cook at home, drive your car until it legitimately dies and don't rent an expensive apartment. Live simply, work as many extra hours as you can stand and consider saving for a simple, sensible home. Buy the cheapest home on the nicest street that you can afford even if it is ugly and pay extra on the mortgage every month. Best wishes.
Sep 2, '15
Thank you both so much for these well-thought out responses! I truly appreciate it.
I had a half-way decent emergency fund saved up a year ago, but then my car broke down at the same time that I had some major dental work done (which insurance didn't cover), so I depleted that pretty quickly. So as far as my priorities go, it sounds like I should probably focus on building that emergency fund back up, put a bit each month into savings (possibly Roth IRA), and then pay off a little bit of my students loans if I can. I don't technically have to start paying on the loans until I graduate, but I'd love to knock some of the interest off if I can.
Sep 3, '15
A very simple list of monthly expenses. Paper and pen. Each month I record what I paid and when I paid it.
It's so gratifying to me to watch the list get shorter.
The emergency fund is a given, as is retirement.
Sep 10, '15
I use a spreadsheet that lets me decide where my money will go each month. My DW and I attended Dave Ramsey's course. It was money well spent. We went from up to our ears in debt and slowly sinking further to now being debt free except for our mortgage.
Here are the bare bones steps. The course fleshes out everything financially including insurance and investments.
Feb 4, '17
I still use pen and paper, but would be interested in doing it online or computer, but the pen and paper works well for me.
I've learned the hard way last year the importance of saving when I was out 12 weeks after shoulder surgery and ran out of sick time and had no short term disability to supplement.
I've recently opened up a new saving account for the specific goal as stated in azhiker's link to build up to 3 to 6 months expenses in the bank. I do have the $1000 emergency fund but not three months expenses. About five or so years ago I upped my pre-tax retirement savings to 15%.
I'm not actively working on paying off my house, perhaps I should consider that, since I'm 57 and have 27 years left on the mortgage.
I carry no debt other than the mortgage. Car is paid for and no credit card debt.
Two things in my budget do make it harder for me to reach that six month expenses quicker and those are that I budget for entertainment and travel. For example despite my issues last year I managed to save for a trip to Spain later this year and it's paid for. I travel economy and use a tour company that gives discounts, but my 80 year old parents have taught me the value of traveling while young and healthy and without regret. I also don't go out and spend a lot of money on entertainment, but a nice meal out, a movie, and theater and weekly bowling are things I enjoy. Life is to be enjoyed and lived and it costs.
Finally I budget for a charity donation monthly.
I'm blessed, but I'm still learning, growing and have goals.
May 3, '17
I use and love youneedabudget.com
It has a learning curve, but it has been awesome for me. It's envelop based, so it completely nips the habits of spending money before you get it.