Saving up for a big purchase can feel daunting. Paralyzing, even. How can I afford a new phone if I can barely buy myself lunch once a week? When will I ever move out if these student loans never get paid off? After college, I started earning big-girl dollars, and with them came big-girl bills. For the first few months, it felt like my finances were controlling me. The thought of ever going on a fun vacation or finally moving out of my parents’ house felt like a distant dream, rather than an achievable reality.
When my laptop finally died on me, I realized I needed to get serious about saving. A thousand laptop dollars weren’t going to just pop up in my bank account — I needed to put it there myself with good spending habits and saving savvy.
Over the last year, I’ve gotten myself into healthier financial mindset — but trust me, it didn’t come easily! Here are three guiding principles I adopted along the way.
Create a budget
The best budgeting advice I ever received was “give every dollar a job.” I used to look at my checking account as a pool of money that I hoped and prayed would last me through the month. None of my dollars had “jobs.” They just sat in my checking account until I got invited to a concert, or needed to fix my phone screen, or forgot my lunch and needed to buy it at work. And every time, I’d find myself crossing my fingers as I swiped my debit card, praying I had enough cash to do it all.
Next payday, sit down with your paystub and give every dollar a job — some for your gym membership, some for your monthly commute, some for clothes shopping, and so on. Once your dollars have jobs, you won’t dread paying your bills. In fact, paying bills gives me a sense of satisfaction, because I budgeted for them. Once you’ve established your immediate spending needs, you can assess how many dollars are left over to save for your big purchase. Give those dollars a job too, like “new car,” “Alaskan cruise,” or “custom orthotics.”
Track your expenses
Now that you have a budget, create a tracking method that makes sense for you. Tracking helps you save for big expenses because it gives you a front row seat to where your dollars are going and prevents you from overspending in any categories. If you know you’re running low on your “fun” budget and you get invited to a concert, maybe you should pass this time around. Or, if you absolutely NEED to see John Mayer in concert (I hear you!), you can reallocate funds from other budget lines to cover the expense. I’m definitely guilty of this — leftovers for lunch every day this month, because I need to stash that lunch cash for a trip to Paris! Just be diligent about not pulling from your savings allocation, or your goal will take longer to reach.
There are some fancy budget tracking apps you can pay for, like You Need a Budget or EveryDollar. A tried-and-true Excel sheet works for some people. I use Mint. It’s free, you can access it online or on your phone, and, oh yeah, it’s FREE! Mint allows me to link all of my accounts, so I have everything on there — from my 401K, to my student loans, to my checking account and credit cards. Every time I make a purchase, it syncs with Mint, and I can allocate the expense to any of my budgets — shopping, gym, commute, you name it!
Be honest with friends and family about your finances
This one takes a lot of practice. If you’re anything like me, your biggest chunk of discretionary spending probably goes toward socializing — trips with friends, dinner and drinks, or birthday gifts. If you’re accustomed to doing these things often, it can be hard to scale back, especially at the risk of disappointing friends and family. I used to say yes to every invite, at the expense of nail-biting worry leading up to the party, getaway, or brunch, and feel guilty afterward for the money I spent.
When I started being honest with friends about my financial situation, I began to breathe easier. Saying no doesn’t have to be a downer, because you can always offer an alternative. “What if we grab bagels and eat them in the park, instead of doing brunch? I’m trying to save up for my sister’s bachelorette party, and I’m halfway there.” Or make it nonchalant. “Hey, I’m not drinking at dinner tonight. Saving every penny to pay off my car next March!” Chances are, they’re in a similar situation (or at least were at one point) and can relate and empathize. If not, I’m sure they’ll be inspired by you and your budgeting savvy!
Originally published on January 23, 2020.