How to manage your own money
Manage your cash flow
Take a look at your incoming money, and review your expenses to put together a basic budget. You can enlist any number of different tools for this: pencil and paper, a simple spreadsheet, mint.com, QuickBooks, an app of your choice, or your bank. The most effective budgets start with money coming in, then fixed expenses—things you must pay, like taxes, rent, groceries, car payments, student loans, etc., which stay the same each month—then discretionary expenses, which are easily adjustable—entertainment, dining out, travel, etc. Put these expenses in order (as best you can) from what you would have the hardest time changing to the expenses which are easiest to change, or simply not incur. Sometimes just writing down where all your money goes will help you see where you can cut back if you need to, like the famous latte example.
If money is tight, think about creative exchanges to save money. Figure out how you can keep the part you really like, and give up paying for the stuff you don’t really care about. If you love to see movies, consider joining Netflix, or check out your local theatres to see if any of them have bulk rate tickets. Even just giving up the jumbo popcorn and drink will save you $10 each time you go to the theatre.
Address your debts
Now that you know how much money you have for discretionary or flexible spending, take a look at any student loans, car loans, or credit card debt that you have and write down the interest rate for each debt. Make all of your minimum payments, and start paying down the debts beginning with the highest interest rate. This is where even a little money will make the most difference, thanks to the miracle of compounding interest.
Even if its $10, put something aside each time you get paid. If you have direct deposit, have part of your check automatically sent to your savings account. If you don’t have direct deposit, you can set up an automatic transfer to move money over from your checking account to your savings account on the day that you get paid.
Set a goal—or several—and think of this fund as untouchable, until you reach that goal. Also realize that what you’re building here is important. It’s a freedom fund. If you have cash on hand, you can move out from your parents’ house, or away from an annoying roommate; you can leave a job that you hate, or better survive a rocky job market.
Learn the difference between spending and investing
On a tight budget, you may feel conflicted about letting your money flow out, but there are certain places where it makes sense.
First, you need to make sure that you look the part for your job. You may not need more than one suit for interviews, but you will definitely need clean and neat business clothes, and a regular haircut. You can save money by checking out your local used clothes stores for bargain options, but make sure the items fit well and look appropriate to your work environment.
Memberships and trade publications are great assets to help you jump into your field and start networking, and are usually worth the price. Sometimes, you may even be able to find a discount if you ask: often there are ‘Youth’ versions of the associations, specifically geared to those fresh out of college, that emphasize networking events and have a lower entrance fee; or your association may offer a library where you can access those same trade publications for free.
When considering where to live, take a look at your housing options. In some markets, it may actually cost less to buy a house or condo than it does to rent an apartment, especially if you have a roommate or two. Check out your local apartment and realty listings and use a handy online calculator to see which may be the right option for you.
Above all, be thoughtful about your money. You can micro-manage it, or stick with the big picture, but it is your money. With proper attention to it, you can build the life you want, to hold all the happiness that comes from the rest of life.
Dana Fulton is a marketing consultant for Wells Fargo Education Financial Services, and received her Bachelor of Science from the Massachusetts Institute of Technology. Today she spends her spare time in the house she rebuilt with her husband, raising two small daughters that inspire her to do meaningful work and save as much as she can for their upcoming college years.