One of the most difficult aspects of post-grad life is navigating finances. Specifically, managing savings. Believe me, I get it - often your first job out of school pays extremely little and your expenses feel like they're piling up around you. Oftentimes living paycheck to paycheck is a normal occurrence for many of us right out of school - which means focusing on building our savings accounts isn't at the forefront of our priorities list. The problem with this is you can never get ahead and it makes planning for future things or emergencies extremely difficult.
When I graduated college I told myself I was going to prioritize my savings even if it meant depositing $10 into my savings account each week. I was also fortunate that my parents and other members of my family put such a big emphasis on savings so I had examples of how to save from an early age.
Here's what I'm doing to save money, even with a small income...
Set Financial Goals
Setting goals is a great way to hold yourself accountable when it comes to finances. When it comes to my savings I like to set 3 different goals; a 6-month goal, a 1-year goal, and a 5-year goal. My 6-month goal is usually an item or something specific I want to purchase. For instance, I needed a new laptop recently so I made that my 6-month goal. My year-long goal is something like a vacation, or another, more expensive item, etc. Typically, my year-long goal is always something related to travel or vacations, since that's one of my favorite things to do. My 5-year goal is my larger financial goal (i.e. paying off debt, buying a car, buying a house, etc.). This is a goal that I keep in my mind as a way to encourage myself to save more. To me, if I have multiple goals it gives me the confidence to save money, and it makes saving money over a long period of time more appealing because I have multiple things to look forward to.
Set Up Direct Deposits to Your Savings Account
This was possibly the best thing I could've done to grow my savings accounts. Since most jobs require you to set up direct deposit anyway this is a simple way to ensure part of your paycheck goes into your savings account without having to transfer money every time. One of the best lessons I learned from my parents was to get used to living on less than your full paycheck so you don't miss it if something happens. Currently, I like to put 20% of my paychecks into my savings accounts but when I first started I was only putting 10% in those accounts. As I got better at budgeting and got more confident managing my own finances I increased the percentage. If you have a small income you can still put in a certain amount, even if it's 1% that'll add up over time! It's more than worth it to invest in yourself and this is one of the easiest ways to do that!
Open at Least One Extra Savings
This is something I started in 2020 and it's been extremely beneficial. It gives me another way to save my money and keep my money separated into categories. I use my main savings account as my emergency fund and that's one I never transfer or pull money from. The other savings account is the one where I keep the money for things like different goals. Whenever I deposit money into my savings I make sure to split my deposits evenly between these accounts. You'll be amazed how quickly you can grow both of them by depositing into each of them at the same time.
Deposit Pocket Change and Extra Money Into Your Savings First
We're all guilty of collected change and random cash throughout the week. Sometimes this ends up in our wallets and it's much easier to spend it on things like coffee and take-out when it's right at your fingertips. The best way I've found to combat this is to turn my change/cash into savings. Whenever I have change I put it in a jar in my apartment, and a few times a month I put whatever cash I find in the jar as well. At the end of each month, I then take that money and put it into my savings accounts. It might not be much, but even a small amount is a step closer to your goals!
It's not enough to deposit money every now and then. In order to really grow your savings - especially with a small income - you have to be consistent. You might have to start with only one deposit into your savings a month and gradually increase the amount or the frequency but as long as you stick with it you'll be able to grow your savings over time. You have to be patient but staying consistent will pay off in the long run.
Don't Withdraw/Transfer Money from Your Savings
I can't emphasize how important this one is to grow your savings account. I look at my savings deposits like bills I have to pay. Each month a certain amount of money is "paid" to my accounts and once it's paid I can't take it back. The only exception to this is when I am using money from my savings for my specific goals. That is why I love having multiple accounts. I know that one account is off-limits and only for emergencies and the other is the one where I keep the money for my goals. Only at 6 months, a year and 5 years can I withdraw the money from that specific account and it can only be the amount required for those items. By keeping myself from withdrawing and transferring money from these accounts I can make sure there is always something to help me should I run into any issues.
Have a Minimum Amount to Keep in Each Savings
Most banks I know have a minimum amount you have to keep in your accounts to avoid a fee. This can be really helpful when you're just starting out. As you get more comfortable with savings however it's a good idea to set your own minimum amount, higher than the one the banks set for you. This is an amount that you cannot go below at any point; even if you are at 6 months and want to purchase a new laptop or other items. This holds you accountable and makes it easier to grow your savings even after reaching your goals because you aren't having to start at 0 every time.
Cut Out Unnecessary Spending
As obvious as this one is, it is probably the one I struggle with the most. Let's face it, sometimes it's easier to order take out or grab a coffee on your way to work, and there are times the dollar section at Target is screaming for you to buy some trinket you aren't going to use. If you want to grow your savings cut all of this out as much as possible. My main issue is buying coffee out. I've tried over and over to cut it out completely and every time I fall out of practice and end up right back in the drive-through line at Starbucks. So, in order to cut out most of this spending I've made a rule. I'm only allowed to buy Starbucks or Dunkin Donuts if I use a gift card, and I treat myself to a coffee out at my favorite local coffee shop once a week. The rest of the time I make coffee at home or work and avoid the price tag altogether. While you aren't directly putting money into your savings this way you are limiting your spending, which in turn makes it easier to save money.
I hope some of these tips help you to grow your savings accounts, even if you feel like you don't have a lot of money coming in. Trust me, there are times where I still feel like this but as everyone tells me, it will get better! If you're willing to sacrifice certain things for the sake of savings, I promise it will pay off in the long run!