Becoming an adult is an interesting journey.
Without warning, you appear as a “grown-up” to other kids. Yet, you still feel like you did back high school–at least that’s the case for me. As you transition to the work life, having kids, losing friends, and making friends–you begin to wonder if you’re adulting properly.
Don’t worry, I have a feeling you are. But, an important part of becoming an adult is ensuring that you’re paving the way to your ideal life. And, money is a perfect tool to help you do just that.
The problem is you don’t know where to start. Work and life get in the way–before you know it, months pass by and you make no progress.
The good news is that there are money-habits that have worked well for others–and they can work for you.
These habits will set you up for success in the future. They’ll remove stress and bring more happiness to your life.
Although I’m adulting with you–I’ve learned a few things from other successful entrepreneurs. If you want to create your ideal lifestyle–one where you wake up each morning feeling good about your day–here are 7 tips on saving money for young adults.
1. Make Costly Sacrifices Now to Live Better Tomorrow
Odds are that you’re not living your ideal life. After all, you’ve only begun your journey as an adult–this is a good thing.
Because now is the perfect time to make sacrifices to build your ideal lifestyle for the future. The sacrifices I’m referring to are eliminating items you don’t need or as many as you can. Most Americans, including me, carry some type of debt.
Begin understanding the amount you’re spending on unnecessary subscriptions, clothes, and other items. Then, create a list categorizing these items as needs or wants. Track your expenses with Personal Captial and aim to remove most of your items in the “wants” category.
Besides money, you need to make time-commitment sacrifices. Here’s what I mean–work before heading to your job, after you finish, and on the weekends. Hustle and start the business you’ve always wanted–work towards landing your ideal career.
If you don’t have kids this means you’ll have extra time to work–but if you do, you can still work around their schedule. It won’t be sexy, and you’ll have to decline many invitations to go out–but it’ll be worth it in the future.
“Eating shit for a decade and doing it for yourself is good for you.” – Gary Vaynerchuck
2. Have Courage to Walk the Unkown
Do you fear the unknown?
I do, but I still take action–and so should you.
Although it may not look good on your resume–try many different roles in a short period of time. Don’t settle for a career you’re miserable in–now’s a great time to discover what’s out there. What’s the worse that can happen?
You may land jobs that are worst than others or you can find a career you’re passionate about. The problem is that as you start getting older you become more dependent on your job–making it more challenging to switch careers. Data shows that people who are the most unhappy work in blue-collar jobs.
But, regardless of which type of job you work in, now is the time to check where you stand. If you’re happy in your current job, great. But, if you’re unhappy, there’s no better time to take a leap of faith than now.
3. Love Yourself First Before Anyone
In early adulthood, many people start preparing for the future.
For example, experts recommend that you save for your kid’s college, a house, and so on. Instead, be selfish and focus on investing in yourself. Buy courses that will help you gain new skills.
Even better, take a week or two traveling to different parts of the world.
Investing in adventures is important–assuming you’re financially capable. You don’t even need to travel the world–you can go hiking and attend local conferences. Experiment with new things, and discover a different side of yourself.
Take care of yourself first before saving for others.
Go to Amazon and buy all the self-help books you can find. Think back to when you were a child–what areas did you struggle with? For example, did you grow up with a single mother? Where you bullied in high school?
Begin practicing self-compassion and pay attention to your feelings. You may have gotten over most of these challenges, but some may still be present. Seek professional help and focus on improving your well-being.
Now’s the time to start crushing the monsters hidden in your closet.
4. Build a Freedom Fund to Buy Your Happiness
Save, save, save.
All your life you’ve heard to save for the future–feeling unmotivated along the way. Instead of saving blindly for the future, save for a specific goal in mind–one worth saving for. Which goal?
What would you get more excited about? Saving for an emergency or building freedom? My guess is that building freedom will excite you more.
By saving for financial freedom–you’re creating a strong motive to save.
You save to not become a slave to anyone. You save to pay off debt faster and no longer feel stressed about money. You save to create more happiness in your life.
Open a new savings account and name it “Freedom Fund.”
Start giving meaning to the money you save. For example, let’s say that you earn $500 each week. Once you save $1000 you know that you’ve built 2 weeks of freedom ($1000/$500.)
Keep saving and hustling until you build enough freedom.
5. Crush the Belief that Homeownership Will Lead to Happiness
The old American dream consisted of a white house with a picket fence.
This isn’t the case no more. With student debt revovling at 1.5 trillion it doesn’t make sense to dig yourself further into debt. You may feel social pressure–knowing that your friends are purchasing homes. But, is it worth getting further into debt for the next decade or two?
Instead, rent as long as you can. Use any extra money you’re saving to invest in yourself or pay down debt faster. Your goal should be to become less dependent on your job.
Having a regular 9–5 job isn’t a bad thing–being dependent on one is. Even worse when you’re at a job that you’re miserable in. Instead, free yourself from as many money constraints as possible. This way you make important life choices out of choice–not for financial reasons.
Buy your home when you’re financially better off instead.
6. Track your Money Automatically to Build Financial Confidence
You can no longer continue guessing how much money you’re spending each month.
Money not tracked is money wasted. Take full ownership of your finances and create a budget you can commit to. As an adult make it a habit to give each dollar a job.
Don’t aim for perfection–instead, build strong financial systems. Everyone is prone to make mistakes at some point. How will you prepare for these downfalls?
A great approach is to use Personal Capital to track all your expenses. Setup automatic transfers to your savings account, and delete unnecessary subscriptions. Cut your expenses and maximize how you’ll spend this extra money.
Paula Pant keeps it simple–with what you spend and what you earn there’s a gap. Make it your mission to widen this gap as much as possible.
7. Consolidate All Your Debt to Be On Track to Financial Independence
Besides student loan debt, Americans carry on average $4000 in credit card debt.
Keep in mind this isn’t including mortgage debt and other types of debt. Paying off debt is one of the most important things you can do to improve your financial future. I felt relieved after paying down $5500 in credit card debt–and you will too.
Carrying debt has many negative side effects. Such as, being dependant on a job you’re miserable in and carrying constant stress. Eliminating debt as soon as possible–is key to living a happier life down the road.
Begin eliminating one debt at a time. For example, pay off all credit card debt first and pay the minimum on other balances. Then, work your way to paying off student loans.
Take Advantage of Your Youth to Build Your Ideal Lifestyle
Adulting shouldn’t be difficult nor bring misery.
You don’t need to become frugal–depriving yourself of buying nice things. But, you do need to save more than you spend–widening the gap between your income and expenses. Find your right balance.
Imagine feeling confident about your financial future. As each year passes by, you meet your important financial goals and set bigger ones. The best part is that you now wake up each morning excited to start your day.
Most people carelessly spent their money without a plan. But, you went out of your way to learn from others–hungry for an answer to living a better life. I can’t guarantee that by following these tactics you’ll live your ideal lifestyle.
But, I can say with confidence that these tactics will take you one step closer.
You’ll learn about different financial strategies and adopt better money habits along the way. Like becoming an adult–you won’t feel yourself transforming into a completely new person. One who’s responsible with their finances and lives their life with a purpose.
The clock is ticking–what will you do now that you’re still young?