Saving Money

  • Twenty_Someth...

    Posts: 1388

    Jan 12, 2014 6:03 AM GMT
    After realizing that I am an atrocious spender, I decided to make a budget this year to keep track of my finances. I am the kind of person who needs to see my goals in the moment, while they are happening to appreciate making a change, so I made a system of envelopes that I've pinned to the wall to hold my money. I separate all earnings into cash based on percentages that I've arbitrarily assigned:

    30% Rent
    20% Savings
    20% Other Bills
    10% Fun
    10% Food/Gym
    10% Emergency Fund


    I don't know why, but it's fun to take the money I earn and sort it in this way. (Hopefully I don't get robbed or burn down my apartment!!!)


    What do you guys do to save money? Seems like an important part of preparing for the future, but I've never been one to worry about it until recently. What breakdown do you allocate for expenses and savings in your budget? Any tips or pointers that would help everyone else out who is wondering about the best way to go about this process? Thanks! icon_biggrin.gif
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    Jan 12, 2014 6:44 AM GMT
    You're actually very smart to do this as it's a great way to discipline yourself. Putting money into a savings and having an emergency fund are two things most people do not do. Good for you.

    As for investments/savings, start small and it will grow. I started at about your age, maybe a little older, and by the time I was 35 I was way ahead of anyone my age. Not rich but I had money set aside for a rainy day.

    If you want to move away from the envelopes and go into something you can't dip your fingers into so easily, look for some no-load mutual funds. Make sure they're no-load. Keep your investing diversified, meaning don't put your money into a fund that only invests in companies making hula hoops but instead a fund that invests in companies that are in businesses such as autos, pharmaceutical products, banking, energy, retail, services, etc. That way if one sector goes down, not all your investment goes with it. Look for a fund that invests in the Wilshire 5000 Index or Dow 100 Index, they're all diversified.

    Start small, read up on beginning investing, watch your money grow. Be sure to sign up for a 401K as soon as you have a job. Learn about what your company plans are invested in. Always ensure you get all the matching funds if your employer (if you have one or when you do have one) offers matching funds...free money icon_smile.gif Good luck!
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    Jan 12, 2014 7:06 AM GMT
    I stay single. That's how I save money. icon_lol.gif

    Download Mint for your smartphone. Or some other app. It gives you a nice overview on your spending habits.
    https://www.mint.com/how-it-works/anywhere/
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    Jan 12, 2014 7:09 AM GMT
    While away at grad school I forego renting a place to live and sleep in a corner on a concrete floor.
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    Jan 12, 2014 9:21 AM GMT
    Always make sure you understand the difference between needing something and wanting it. Very little is truly needed.
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    Jan 12, 2014 9:35 AM GMT
    Now my room has too much stuff in it, I rarely feel the need to buy things I don't need at the weekend, like most people seem to. That saves a lot of money. Also I contribute to my company's share-save plan.
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    Jan 12, 2014 9:42 AM GMT
    Your allocations on savings and emergency funds need to be reversed. You should be building your emergency fund as priority because if anything happens to you, i.e. medical emergencies, maintenance of a car if you own one, etc. then your emergency fund will be your saving grace to limit your need to go into debt to cover your expenses.

    My strategy is similar to yours but I add overtime hours to mine. My work has tons of overtime available and I take advantage of it often. That way, I have extra income to allocate for savings, investments, emergency and retirement accounts.

    My best advice for you....do NOT get into credit card debt. Instead, learn to use a credit card to build credit and not abuse it. Too many people have gotten into some serious trouble because they didn't pay attention to how much debt they can handle.
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    Jan 12, 2014 9:57 AM GMT
    kiwiLifter said
    Matiz saidWhile away at grad school I forego renting a place to live and sleep in a corner on a concrete floor.


    Could you put some clothes on please. This isn't grindr.


    Could you go fuck off? This space is reserved for relevant RJers.
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    Jan 12, 2014 10:11 AM GMT
    Regarding Erik101's credit card advice, what I've always done is never make payments on my credit card. I use it as a 30 day loan; when the bill comes I pay it off in full. No credit card interest.

    You could use a debit card instead but if someone steals your card number they could drain your checking account and it could take the bank a while to fix it. You have more protection from that with a credit card. I've had my number stolen twice in the last two years; one time it was for $600 of stuff at a Lowes on the other side of the continent, the next time it was for a Lenovo laptop for $1200.
  • Danskerb

    Posts: 286

    Jan 12, 2014 11:07 AM GMT
    I save money all the time, but then after a year of saving I tend to have a year of spending and travelling away my money. Money well spent.
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    Jan 12, 2014 11:09 AM GMT
    When I get pay check I just transfer a fixed amount to my savings account and use what's left to get through the month. I transfer quite a lot, so I usually end up with not a lot to help me bridge the rest of the month, but that gives me the feeling i'm doing it right.

    Do you think this is a good way to go about it?
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    Jan 12, 2014 12:45 PM GMT
    Truppensturm saidWhen I get pay check I just transfer a fixed amount to my savings account and use what's left to get through the month. I transfer quite a lot, so I usually end up with not a lot to help me bridge the rest of the month, but that gives me the feeling i'm doing it right.

    Do you think this is a good way to go about it?


    Are you reaching a goal? In other words, do you tell yourself "I'm going to have this much money saved by a certain date"? If the answer is yes, then you're doing it right.
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    Jan 12, 2014 3:10 PM GMT
    Twenty_Something saidAfter realizing that I am an atrocious spender, I decided to make a budget this year to keep track of my finances. I am the kind of person who needs to see my goals in the moment, while they are happening to appreciate making a change, so I made a system of envelopes that I've pinned to the wall to hold my money. I separate all earnings into cash based on percentages that I've arbitrarily assigned:

    30% Rent
    20% Savings
    20% Other Bills
    10% Fun
    10% Food/Gym
    10% Emergency Fund


    I don't know why, but it's fun to take the money I earn and sort it in this way. (Hopefully I don't get robbed or burn down my apartment!!!)


    What do you guys do to save money? Seems like an important part of preparing for the future, but I've never been one to worry about it until recently. What breakdown do you allocate for expenses and savings in your budget? Any tips or pointers that would help everyone else out who is wondering about the best way to go about this process? Thanks! icon_biggrin.gif


    That is awesome and I do the exact same thing. The only difference is that I track everything on an excel spreadsheet and I update it roughly once every two weeks (not time consuming at all; just remember to keep all your receipts). If one of the fields are not met (Let's say I spend 9% instead of the 11.6% the difference is put into my savings). I use the excel spreadsheet to set goals too. The benefit of using a spreadsheet is the imputable formulas; it'll do all the math for you. [/nerd]

    It's amazing how much you save when you keep track of your finances. It allows you to enforce controlled spending and limit careless spending.

    Here is a screen shot of the template

    11907921983_2fdffb0e70_c.jpg

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    Jan 12, 2014 3:55 PM GMT
    Something else I do is invest money in the stock market because it gives you a similar feeling of "spending" your money and makes it a bit more inaccessible for those times when you want to withdraw it.
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    Jan 12, 2014 4:00 PM GMT
    I write out everything. A budget for the pay period, a grocery list which includes a dinner menu list and I take lunch to work instead of going out and buying it. It has helped me tremendously.
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    Jan 12, 2014 5:00 PM GMT
    My parents lived thru WW2 , before moving to Australia in 1952 . People who have suffered during any kind of wars , will look at money a different way than others who didn't . My parents drilled my brother and I with the value of money .
    Credit cards are nice tool , but you HAVE to PAY the full BALANCE when you receive it , if you start to borrow from a credit card , you are WASTING your money away .
    Start to save early in age , i did , i am not rich , but i am comfortable and own everything i have , instead of the bank owning it ..lol..
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    Jan 12, 2014 6:39 PM GMT
    Erik101 saidMy best advice for you....do NOT get into credit card debt. Instead, learn to use a credit card to build credit and not abuse it. Too many people have gotten into some serious trouble because they didn't pay attention to how much debt they can handle.

    Erik101 makes an excellent point here, as did Lumpy. Credit cards are the demise of many.

    I use mine regularly and I get a receipt for every purchase, that way ever 2 weeks I can add them up and subtract that amount from my checking account. When the bill comes due each month, I simply add the total of those amounts I've already subtracted, and pay that amount. No surprise enormous amount due because it's already been subtracted from my account. Of course this is coming from someone that balances their checking account every two weeks when I get paid icon_smile.gif Old habits never die!! icon_eek.gif

    One of the worse things you can do is use the ATM balance of your account as what you have to use. There are always withdrawals/checks that have not cleared and credit card expenses that need to be considered when the bill comes due!!!
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    Jan 12, 2014 6:46 PM GMT
    kiwiLifter said
    Matiz saidWhile away at grad school I forego renting a place to live and sleep in a corner on a concrete floor.


    Could you put some clothes on please. This isn't grindr.


    Are you for real? Or just an odd expresser of humor?
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    Jan 12, 2014 6:47 PM GMT
    eb925guy said
    Erik101 saidMy best advice for you....do NOT get into credit card debt.


    I totally agree. I only own one solely because of online purchases but you should always pay the balance! The interest rate is way too high and once your in that hole, it's hard to climb out!
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    Jan 12, 2014 6:51 PM GMT
    Lumpyoatmeal saidAlways make sure you understand the difference between needing something and wanting it. Very little is truly needed.

    I know!
    No matter how little or much I make, I just manage to pay the bills.
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    Jan 12, 2014 6:53 PM GMT
    Truppensturm saidWhen I get pay check I just transfer a fixed amount to my savings account and use what's left to get through the month. I transfer quite a lot, so I usually end up with not a lot to help me bridge the rest of the month, but that gives me the feeling i'm doing it right.

    Do you think this is a good way to go about it?

    Sounds good. If the "savings" are something you can have easy access to, and if they garner a good enough return. But since you are in europe, it's hard to know what opportunities are available to you. In the US, most guys your age have to be concerned about large loans for university to be paid back, and there are special tax laws regarding savings that one should take into consideration
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    Jan 12, 2014 8:03 PM GMT
    Truppensturm saidDo you think this is a good way to go about it?

    Yes. I do something similar; I have a mutual fund account with Vanguard and you can have them take the money out of your checking account electronically. I've set it up so that every month they take some out and put it in a fund that's a mix of stocks and bonds (Lifestrategy Growth Fund [VASGX]). This is my emergency long term savings; no plans to use it for anything. At the end of each month I always have some money left over in my checking account and that I transfer to my bank savings account.

    If you're thinking about a mutual fund, Vanguard is much better than Fidelity. Fidelity has lots of hidden fees and costs.
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    Jan 12, 2014 10:11 PM GMT
    HikerSkier said
    Truppensturm saidWhen I get pay check I just transfer a fixed amount to my savings account and use what's left to get through the month. I transfer quite a lot, so I usually end up with not a lot to help me bridge the rest of the month, but that gives me the feeling i'm doing it right.

    Do you think this is a good way to go about it?

    Sounds good. If the "savings" are something you can have easy access to, and if they garner a good enough return. But since you are in europe, it's hard to know what opportunities are available to you. In the US, most guys your age have to be concerned about large loans for university to be paid back, and there are special tax laws regarding savings that one should take into consideration

    I have absolutely no idea what the return is on my savings account. I paid 88 euros to go to university, so no loans involved.
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    Jan 12, 2014 10:13 PM GMT
    Lumpyoatmeal said
    Truppensturm saidDo you think this is a good way to go about it?

    Yes. I do something similar; I have a mutual fund account with Vanguard and you can have them take the money out of your checking account electronically. I've set it up so that every month they take some out and put it in a fund that's a mix of stocks and bonds (Lifestrategy Growth Fund [VASGX]). This is my emergency long term savings; no plans to use it for anything. At the end of each month I always have some money left over in my checking account and that I transfer to my bank savings account.

    If you're thinking about a mutual fund, Vanguard is much better than Fidelity. Fidelity has lots of hidden fees and costs.

    Maybe I should look into this more and check what I get back from depositing my money on my savings account. I imagine it's going to be very little. Money in general doesn't interest me in the least bit though, as long as I get around and can live comfortably.
  • Adozark

    Posts: 299

    Jan 12, 2014 10:28 PM GMT
    Lumpyoatmeal saidRegarding Erik101's credit card advice, what I've always done is never make payments on my credit card. I use it as a 30 day loan; when the bill comes I pay it off in full. No credit card interest.




    Exactly, when you use them right credit cards a such a useful tool, and to think the poor use payday loans for that reason, it's a shame that they are taken such advantage of.