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Power to the purchaser

Having finally gotten back from running way too many errands, at the tail end of a season of rampant consumerism, I’ve found myself thinking a lot about the way we buy things. If you’re reading this, chances are you live in a mostly capitalism-driven economy. That reality, of course, come with pros and cons. One of the cons is that companies and corporations sometimes prioritize profit over integrity and ethical practices. One of the pros is that you, as a consumer, get to choose what companies you give money to.

This means that any practice or belief you hold to strongly can, in theory, be supported further through what you do or don’t buy (and who you do or don’t buy from). This might mean buying organic produce and free-range chicken products, not buying products that were tested on animals, or ensuring that something you buy is local or fair trade.

Sometimes, of course, convenience or cost may make sticking to any buying preferences difficult if not impossible. For many emerging adults who are on stricter budgets than more established adults, sometimes purchasing power is a lot more limited than we’d like.

Here are some quick numbers:

  • Despite Millennials earning only 62.6% of the pre-tax income that Gen-Xers do, housing for Millennials costs an average of 75% of housing costs for Gen-Xers.1
  • Millennials spend two-thirds the amount spent by Gen-Xers and Baby Boomers on entertainment.1
  • 60% of Millennials prefer to purchase generic brands over name brands.2
  • Nearly 50% of Millennials would be more willing to make a purchase from a company if that specific purchase supports a cause.2
  • 81% of Millennials expect companies to make a public commitment to charitable causes and corporate citizenship.3

In other words, a lot of us care how we’re spending our money — even though we have less buying power than older generations do now, and in many cases less than they did at our age. (Caused by things like the fact that in the U.S., college tuition and fees have increased approximately 225% over the last 30 years4, while the average wage index has only increased 26.6%.5)

I care about putting my money where my mouth is as much as is reasonably possible. I’ll buy less from — or cut out completely — brands whose ethics, environmental, and/or labor practices I don’t agree with. But sometimes it’s hard. I love to shop local and support small businesses, but having to buy a bunch of last-minute Christmas gifts meant that Amazon was infinitely more practical.

So how do we balance the two? I don’t have the perfect answer, but these are a few practices I’m going to be trying to implement more in 2019:

  • Read the labels. This is literally the easiest one. Look for labels (in-stores or online) that proclaim practices you want to support. And know when it’s just a marketing ploy: organic and fair trade can be certified, but words like “natural” don’t require any proof of standards
  • Source it. Find out where your stuff is coming from. Usually, the closer to home the more sustainably and/or ethically it’s been made. Not always, of course, but buying local also means a smaller carbon footprint!
  • Look into the company. I’m of the mindset that the bigger the company is, the more cautious I need to be about blindly purchasing from them, as large corporations too often hurt the little guy to stuff the pockets of higher-ups. I buy from a lot of chains and big retailers anyways, but I do try to buy less and at least be aware of their practices as a consumer.
  • Know the real cost difference. Keep in mind that sometimes cheap, mass-produced stuff won’t last as long or will be worse for you in the long run than spending a little more for practices and quality you can get behind.
  • Find other ways to support. If you find a brand whose practices you really like and want to support, say so. That can mean telling friends, following them on social media, buying more of their product, whatever.
  • Be honest about what you can afford. I’ll be honest: I don’t buy all fair-trade, sustainable, organic stuff. I can’t afford it all the time, and I know a lot of other folks can’t either. At that point, you have to determine which purchases are worth it to you, and which ones are areas where you’re okay sticking to the status quo.

This is something I definitely don’t do as well as I’d like, but I hope it’s one that we as a society can continuously improve at. As much as I appreciate low costs and convenience, I want to take care of all the people, creatures, and resources that inhabit our world — and that often means saying so with my wallet.

What do you do for more ethical purchasing? Let me know in a comment below, on Twitter @ohgrowup, or Instagram @oh.grow.up. Thanks for reading, and good luck adulting!

1 Bureau of Labor Statistics, 2018.

2 Millennial Marketing, 2018.

3 Horizon Media Finger on the Pulse Study, via Forbes, 2014.

4 CollegeBoard, 2018.

5 Social Security Administration, 2017.

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So you blew your budget

Despite meticulous, careful planning, I seriously blew my Christmas shopping budget this year. The biggest reason is that family grew on a few sides — like, last year I bought 12 or 13 gifts total and this year I bought 26 just for family. Plus some gifts cost more than expected, and being busy meant I didn’t make as many presents this year as I usually do.

None of those things are bad, but as someone who is very careful and intentional about finances, it does create a bit of a dilemma. Luckily I’ve found a few things that help bridge the gap.

First, the standard disclaimer that I knew everyone’s financial situation is different, which can make well-intentioned gift giving even trickier than finding the right idea. We all want to give something the person will enjoy and feels nice, but don’t want to break the bank or go too extravagant.

For emerging adults in particular, we’re usually considered grown-up enough to be expected to choose/buy gifts for people on our own, but often non financially established enough to be able to comfortably afford that. Which proves a sticky situation this time of year.

Also, I have some issues with the materialism and the contractualism that have seeped into the holiday season for so many of us, but at the end of the day, I still like giving loved ones gift that hopefully make them happy in some way. So we’ll start off with some ways to save when holiday shopping:

  • Gifts in bulk. I hate giving duplicate gifts, but I also have a crap ton of family. My way around this is usually to choose a category of gift and then try to individualize them for each person. For example, personalized ornaments or a batch of sweets with a note about why I’m grateful for them.
  • DIY when wise. Sometimes, DIY can prove more expensive and more time-consuming than just buying, but if you can do it cost-effectively, it can mean a lot to people that you made something for them rather than just going to the store and buying it.
  • Memories over stuff. Connecting a small gift to a memory or meaningful moment can be a lot more special for a loved one than stuff at all. Experiences, photographs, or even their favorite candy bar with a note show that you care about and know them, not just that you can buy stuff for them.

Sometimes, of course, it’s too late to save. Or just plain hard. I could have gone less overboard with Christmas shopping this year, but I’m not sure I could have stayed in budget, and the closer I got the more I’d be unsure if I was getting each person enough (again, the contractualism thing). So what about after the budget has already been blown?

Here are the most useful methods I’ve found for recovering from going over budget:

  • Cut back in other flexible areas (aka fun stuff). I went over budget on Christmas shopping, so I won’t get to eat out for, like, a couple months. I still have to eat and I’m not going to avoid all fun activities, but I am cutting back quite a bit on what was already a small budget (fun spending makes up about 10% of my monthly budget).
  • See if there are areas you can redistribute. I overspent on Christmas this month but needed way less gas than usual. So I moved some funds around in my budget and brought the deficit down a little.
  • If it’s worth it, it’s okay to pull a little from savings once in a while. Savings isn’t meant to be hoarded forever — but it is meant to be used with careful discretion. I try to save 30% of my income every month (and fully realize that isn’t possible for everyone, though saving some is), and try to only dip into it for large expenses like a vacation — still, of course, setting limits on how much. But I put a little less into savings this month so I know that it’s covered, and because I’ve already saved carefully and doing so doesn’t threaten my emergency fund.
  • Don’t compromise what you shouldn’t. Your bills still have to get paid. For me, how much I donate to charity or people in need every month is also non-negotiable, and not something that consumerism (no matter how holiday-themed) gets to threaten. Those things come first, period.
  • Adjust your budget so you don’t do it again. Few categories of purchase are truly one-time things. So if something ends up costing more than you realized, adjust your budget accordingly so that next time you’re ready. In my case, I’ll be cutting back slightly on fun spending throughout the year as well as lowering the budget for each gift to make sure I’m in a better spot next year.

How do you avoid going over budget, and how do you handle it when you do? Let me know in a comment below, on Twitter @ohgrowup, or Instagram @oh.grow.up! Thanks for reading, and have a warm and happy holiday season!

(Photo is a free stock photo because I am definitely not done wrapping gifts.)

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Renting 101

Today’s post is a little later than I prefer because this week has genuinely been so busy I wasn’t able to start drafting it until this afternoon. But as fall and winter are popular seasons for renting/rental leases to start, so I didn’t want to push this topic back any further.

If you currently own a house, good for you. You get to choose whether to keep reading or not, but know that you may be renting again in the future and even if you don’t, people close to you likely will. For emerging adults — especially Millennials and likely the upcoming Gen Z folks — renting is a fact of life. Many of us won’t be able to afford to buy a home until many years in the future, if ever.

There are pros and cons to renting vs. owning, of course. When you own a home, all that responsibility falls on you. But renting means it’s only temporarily yours, and that the money you’re spending on housing isn’t going towards anything that will pay off in the future (the way a mortgage does). It’s not like you’re throwing money away, because a roof over your head is important, but you’ll never get anything back out of it.

On that cheery note, let’s jump in. Full disclosure: I had never had to rent before I moved into the apartment I’m currently living in. I got a lot of advice from friends and family (and the internet), and I’m still figuring things out. But I have been thoroughly acquainted with the process, and it doesn’t have to be as intimidating as it may feel at first.

Looking for a place to rent

I’m gonna be honest, this is a crappy process. When my roommates and I were looking for our place, we scoured websites, had massive email chains, and spent a lot of time looking at various options. But there are a few things that can make it easier:

  • Know your budget — and stick to it. We set a range based on research of average rent in the area, knowing that anything below our range was probably sketchy, and anything above it (which was still a lot of places) was more than we were comfortable paying.
  • Know your “musts” versus “nice-to-haves.” Number of bedrooms and bathrooms, laundry facilities, parking, pet policies, included utilities, kitchen and living room setup, stairs, flooring, etc. There’s a ton of options and you need to know what you are and aren’t willing to be flexible on (do note that more “musts” might up your cost).
  • Don’t consider places that don’t meet your musts. You’re just wasting your time looking at a place you wouldn’t be happy in.
  • Determine how long you want the lease to be. A year is pretty standard, but some places do 3, 6, or 9-month leases, and others are willing to do month-to-month or more flexible arrangements. Make sure you’re willing to commit to the amount of time they’re asking you to sign on for.
  • Search all the websites. com (my favorite), Zillow, Craigslist, etc. Also check out Facebook rentals which can sometimes have gems that aren’t posted on the bigger sites.
  • Be careful. Make sure areas aren’t sketchy and that listings aren’t fake before you go out to see a place. If you aren’t sure, do some more digging, and if you end up going, bring a friend with you (and make sure another person knows where you’re going).
  • Know what documents you’ll need. For most people, this is proof of rental history, a few forms of ID, pay stubs to prove you meet the income requirements (often anywhere from 1.5 to 3 times the rent total), and credit score. Be aware that you shouldn’t be required to show any of this info (besides ID and some contact info) until you’re actually applying to rent — aka not when touring.
  • On that note, make sure you have decent credit. If you have not great credit, you may still be able to rent, but your deposit will likely be a lot higher. I always recommend extreme caution with any kind of debt, but encourage having one credit card that you pay off in full every month to establish a good credit history.
  • Rental history matters. A lot of places won’t rent to you without it. (Though property ownership can count!) For a first place, this may mean your parents need to also put their names on the lease.
  • Try to schedule tours in chunks. Especially if they’re close by, then you have to take less time out of your day (and potentially off of work). Birds, stones, etc.
  • Keep notes on the places you tour. After a while, they will start to blur together. No way around it. I found it helpful to give each place a letter grade (B-, A+, etc.) as well as to take notes on details and things I did or didn’t like about it.
  • Location, location, location. Be absolutely sure to check out how far a potential place is from your work, school, or whatever not just distance-wise, but how long that will actually take you in traffic. Think about how far you’re willing to drive or take public transportation, and how accessible your place is from where you’ll frequently be traveling.

Being a good renter

Woohoo, you found a place to rent! Assuming you got all the finances and paperwork squared away, you should be ready to move in. Here are my biggest tips:

  • Clean everything before you move all your crap in. Honestly, your new space will feel so much better. Trust. (It will also give you a mental picture of what your place should look like when you let too long pass between cleanings.)
  • Take pictures of any damage, also before you move all your crap in. This will help ensure you get your full deposit back and keep any liability off of you. It’s often part of a move-in checklist, but if it isn’t make sure you still do it.
  • Follow the rules, and if you’re not sure if something is allowed, just ask. Some places let you paint, others don’t. Some places let you have pets, others don’t (or charge an additional fee). If you’re not sure about anything — from installing shelving to HOA policies — just reach out to your landlord and check before moving forward.
  • Be nice to your neighbors. I brought cookies to the neighbors we share walls with when we moved in. I’ll probably also bring cookies or cards around the holidays. You don’t have to do that specifically, but simply being respectful in terms of noise/any shared areas and saying hi when you see each other can go a long way.
  • Mail your rent check on time. Or pay it electronically, or whatever. I usually make sure mine is sent a few days before the end of the month (it’s due on the first) to ensure it has plenty of time to arrive. Pro tip: Take a picture of the check and/or you mailing it as proof in case the landlord tries to dispute payment. Hopefully that doesn’t happen, but better to be covered.
  • Clean every few weeks at minimum. Human beings are gross. But our living spaces don’t have to be. You’ll feel a lot more relaxed if half the surfaces aren’t sticky.
  • When something breaks, let someone know. My apartment has a property manager who has helped us fix a number of random issues, and ensured that we get reimbursed for parts related to any we fixed ourselves. Stuff breaks. Better to get it fixed in a timely manner than not say anything until you’re moving out and 1) have it come out of your deposit, or 2) be a nuisance for the next renter.
  • Change your mailing address. This goes for both when you move in and when you move out. It’s good to get your own mail, and annoying when randos in your old place get it instead of you. Be sure to change it on all your accounts and let loved ones know in case they send you anything.
  • When it’s finally time to move out, clean everything even more thoroughly than when you moved in. Some people hire a professional cleaning service for this; if you don’t want to do it yourself and that’s in your budget, go for it. If it’s out of the price range, buy a friend or two pizza, blast the music, and get to it.

What are the best tips and lessons you’ve learned when it comes to renting? Let me know in a comment below, on Twitter @ohgrowup, or Instagram @oh.grow.up! Thanks for reading, and happy adulting!

(Photo is a free stock photo because my apartment is not this pretty.)

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Making a budget 101

Happy Sunday! I’m back with some practical advice, this time regarding budgeting. I’ve written posts in the past about saving or budgeting for gifts or friends, but realize that I haven’t actually talked about making a general budget yet.

Why have a budget? The short answer is because you spend money. Even if you don’t buy much beyond what you need, it’s the best way to make sure you’re on track with savings and building good financial habits for the future. If you like to spend, it’s those reasons plus making sure you don’t overspend. It’s a way to keep yourself accountable — starting as an emerging adult — so that if you ever want to travel, buy a house, have kids, or retire you can actually, y’know, afford it.

Our generation is strapped with high costs of almost everything and staggering amounts of debt. There isn’t always much we can do about where we landed. But we can do something about where we end up.

As always, the disclaimers: No app or service I mention is sponsored, and I’m not compensated in any way. I only mention specific names because myself or someone I know has found them useful, and hope that others will too. None of my advice is ever all-encompassing. You gotta do what works for you, but I hope this serves as a helpful starting point.

With that out of the way, let’s jump in.

Step 1: Research

Do you know how much your cost of living is? Do you know how much you spend in various categories every month? Those basics are the first place to start. Before I set up my budget for the first time, I had been carefully tracking my spending over the course of several months.* I used that data, plus some info from my parents regarding the costs of food, insurance, etc. to figure out ~about~ how much I needed to account for in various categories every year. Once I had the rough annual cost of each category, I then just divided each category by 12 and ta-da! I had a monthly budget.

Step 2: Setup

I use the free version of an application (I just use the website) called EveryDollar. It’s not perfect, but it’s easy to use and lets me be as detailed or as general as I want. The downside is that unlike apps like Mint — which I tried but didn’t love — you’re responsible for inputting whatever you spend. The good or bad part, depending on your perspective, is it’s not linked in any way to your bank account. So there’s no risk, but it also doesn’t do anything for you except serve as a really helpful, less-ugly spreadsheet.

I’ll be honest. I spend several hours every week budgeting and tracking my finances. But I’m the least stressed about money that I have been since my early teens, so it’s more than worth it.

Below is a loose approximation of my budget, with all the relevant categories. Note that the costs of things per person can vary wildly, so take it with a grain of salt, but I have noted in parentheses what percentage of my income is relegated to these categories.

LIVING

Rent (23%)

Utilities, including wi-fi and phone (3%)

GIVING

Donations (10%)

FOOD

Groceries (6%)

Eating out (3%)

TRANSPORTATION

Gas (5%)

Car repairs, misc. (2%)

INSURANCE

Includes auto, renter’s, health, life, etc. (5%)

SAVING

General (25%)

Specific goals, i.e. car replacement (6%)

[Note that retirement savings is taken out of my paycheck automatically, so it doesn’t appear on this list, but it’s 8% of my gross income]

LIFESTYLE

Clothing, toiletries, haircuts, etc. (2%)

Furniture, household items (3%)

Entertainment, spending money, misc. (4%)

GIFTS

Christmas, birthdays, weddings, etc. (4%)

I realize that’s 101% based on rounding, but bear with me. I also have to spend less of my income on rent than a lot of my peers, which gives me more room to save. But notice all my “fun” stuff — eating out, shopping, etc. — accounts for less than 10% of my monthly budget.

So while I will never say “stop eating out and you’ll magically be able to buy a house,” which is simply not true, I would advise caution and relative frugality with finances. Fun is still allowed! I go on trips and eat out with coworkers. I buy a new piece of clothing if I really want it. But the budgeting part is just putting parameters on how far that can go.

Also I didn’t put a category here for debt, because it runs on a simple rule: Pay it off as quickly as possible. Cut down on fun items, and cut back a little on saving, until debt is paid off at its appropriate pace. For example, credit card debt should be paid off as quickly as possible because it has crazy high interest, but student loans can be paid off more slowly. Being in the black is more important than saving a huge percentage of your income.

Step 3: Adjustments and future planning

I adjust my budget every month. I don’t start from scratch, of course. But if my income is higher from a freelancing project, or I know I’ll be spending more on gas, then I can up one category and lower another, and so on. Everything hovers around the percentages I mentioned above, but it’s completely okay to adjust your budget with your life.

Of the money I save every month, some is for retirement, some is for emergencies, and some is for specific goals like when I’ll eventually have to buy a new car. But a lot of it is just general. Because then, when I want to go on a big trip or if I ever decide to buy a house, I will be much better prepared for having started early.

I know that was a long post, but I hope it proved helpful to you. I want emerging adults, both my generation and younger, to be able to do better than the financial situations we’ve grown up seeing. This is where that starts.

What are your favorite budgeting tools or tips? Are there any questions you have about finances as a young adult? Let me know in a comment below, on Twitter @ohgrowup, or Instagram @oh.grow.up! Thanks for reading, and good luck adulting!

 

*For the spending tracking, I literally just used a Google sheet and tracked notes and amount of all money that I spent or received. It was a little painstaking, but very helpful.

(Photo is a free stock photo because this was way cooler than my ideas.)

Gotta budget for your friends’ lives too

Back to budgeting! Emerging adulthood is tricky. In the midst of learning how to handle and manage our finances, we often forget necessary budget items. Maybe you consistently save for car repairs, but not for car replacement. Maybe you forget to calculate a trip you have planned for into your month’s eating out budget. But one of the big ones we often forget — and frankly, one of the ones that’s hardest to plan for — is budgeting for friends’ lives.

There are mostly big occasions for this: birthdays, graduations, weddings, babies, and the like. For example, I’m going to a couple of friends’ weddings in the next few months, and am realizing that I had not budgeted enough in the “wedding gifts” category. Many weddings also require travel, lodging, and new clothes (especially if you’re in the wedding party).

I’ve been thoughtful to budget for Christmas, but hadn’t quite planned for the fact that late spring brings, in quick succession, four important birthdays and now a few weddings.

So what to do when you go over budget?

First, don’t panic. Be mindful not to go too over budget, but it’s the kind of thing that’s going to happen now and then. You can’t plan perfectly for everything. So take a deep breath.

Try to minimize spending where you can, and/or pull funds from other categories. I won’t be spending as much on food (particularly eating out) or miscellaneous things the next couple of months in order to help offset the costs of big friend events.

Prioritize, and say no if you have to. I’ve had to say no to attending events because the travel and/or other costs were simply too much amidst other events or commitments. It’s a bummer, but it’s a spot that everyone is in at some point or another, so your friend(s) will more than likely understand.

Figure out how much your budget was off by. Then you can adjust it for the future. On that note, it’s also a good idea to have some general, “extra” savings for times like this so when you go over budget you’re pulling from excess or flexible funds instead of necessary ones.

We try to plan for as much as we can, but it doesn’t always work. When it doesn’t we adjust. It may mean adding more to that budget category in the future or stocking away a little cash, but there are usually ways to make sure we’re there for as much as possible of friends’ important moments.

How do you address budget spikes? Let me know in a comment below, on Twitter @ohgrowup, or Instagram @oh.grow.up! Thanks for reading, and happy adulting!

Income talks

What socioeconomic class would you place yourself in? How much do you make compared to your coworkers or other people with your job? A lot of us are uncomfortable thinking about answers to these questions, and some people refuse to discuss them at all. It’s understandable. Your money is your business, and thinking you have or make significantly more or less than our peers can be awkward.

But I’m going to push the envelope a little here: Avoiding talking about income isn’t helpful.

Reason 1: Not talking about income allows us to lose perspective on the reality of large-scale socioeconomics. Feeling broke is different than truly being broke. Emerging adults are a little notorious for feeling — and sometimes being — broke. Some of us aren’t able to work while in school full-time, and the U.S. national average of student loan debt for the Class of 2016 was $17,126. That is, frankly, a ton of money. A lot of us are dealing with minimum wage or entry-level jobs, which often means a limited income. Sometimes ramen is all you can afford until the next paycheck comes.

But perspective is important. When we lose perspective, we risk becoming blind to the needs and realities of people around us. Think for a minute — what socioeconomic class would you say you (or your family) are in? My guess is a whole lot of people would answer middle to upper-middle class. In the U.S., you’re probably right. (Check here to see.) What about globally? According to Pew Research, here are the per capita socioeconomic breakdowns as of 2011:

  • Poor: less than $2 per day
  • Low Income: $2.01–10 per day
  • Middle Income: $10.01–$20 per day
  • Upper-Middle Income: $20.01–$50 per day
  • High Income: more than $50 per day

The median annual household income in the U.S. is $51,915 as of 2013.* Globally, it’s $9,733.

Of course, purchasing power differs with region, not just time. What I can get for $5 in California is different than what I can get for $5 in Copenhagen, which is different than what I can get for $5 in India. The cost of living is *ahem* not low here (nor is it the highest in the world). To balance the numbers a little more, consider that the global low income threshold is 41% of the U.S. threshold, while the global median income is 19% of U.S. median income.**

Reason 2: Not talking about income holds people back. To collectively move higher, we’ve got to help each other out. One of the most interesting patterns that has surfaced with the rise in folks demanding equal pay for equal work and speaking out against unreasonable income disparities is that oftentimes those disparities persist because people have no idea that their pay is significantly different from a coworker or counterpart.

There have been a number of stories about this issue coming up in Hollywood recently, and while I would never suggest taking life lessons from Hollywood willy nilly, I love that a number folks are being more open about discussing pay so they can try to ensure that those in similar job roles aren’t being paid unfairly compared to their peers.

I’ve seen this happen in my own life too. At an old job, a few of us realized the discrepancy in our compensation seemed like more than the basis of rank or responsibility. It turns out, the ones making more were doing so because they had asked to. Knowing how much work I was doing, I felt a boost in my own pay was appropriate, and asked my bosses what we could work out (they responded well and we worked out a deal everyone was happy with). But following that, I made sure to tell coworkers in similar spots that they could consider asking for more, and shared what I made for reference as appropriate.

Of course, if you’re not able to talk to coworkers or peers about income, you can always start by researching the average pay or pay ranges for the job you have or are aiming for. (Pro tip: This can vary widely by region, so make sure to include that in your search.)

The goal here is not to be a downer, and I realize that everyone’s situation is different. But since I started learning more about these topics in the last few years, I’ve tried to keep a larger picture in perspective and be mindful of where I am within it, make sure I’ve done my research so I’m being paid fairly, and when possible to speak up so that I can help ensure other people I know are also being paid fairly. It’s a big, intimidating, adult-ish kind of responsibility, but it’s one that I’m really proud to be working toward.

What are the biggest lessons you’ve learned about income? Let me know in a comment below, on Twitter @ohgrowup, or Instagram @oh.grow.up! Thanks for reading, and good luck adulting!

 

*The median household income for the U.S. increased to $56,516 as of 2016, but it would have been statistically irresponsible to compare data from different years, and 2013 was the most recent global data I could find.

**The math on that: Less than $10 per person per day is considered low income. Breaking down the worldwide median annual income for a family of 4 and 260 working days (which is the U.S. standard, and not necessarily applicable to poorer regions/occupations), that’s $9.36 per day per person, which makes even the rough median estimate qualify as low income. In comparison, the threshold for low income in the U.S. is about $22.72 per person per day, which means that the global low income threshold is 41% of the U.S. threshold, while the global median income is 19% of U.S. median income (all based on Pew Research data).

(Photo credit goes to the ever-wonderful Megan T.)

The future doesn’t save for itself

Recently a friend asked me about how much I typically save per month, just to get perspective from someone else. I had a rough idea, but when I looked at the numbers realized I’ve actually been saving a little more than I even thought. Of course, most emerging adults feel pretty broke, and the prospect of being able to afford huge purchases like a house can feel nigh impossible. So sometimes the goal is just to be, you know, less broke.

Noting all of that, I thought it might be helpful to share some savings tips and tools that I’ve found helpful. But let’s start this off with a couple of clarifying facts:

First, there is no “right amount” to be saving other than as much as you can without creating unnecessary strain on your current financial situation. Whether that’s spare change or more than half your income, do what you can. You’ve got to start somewhere, and saving even a little will mean you’re better off down the road.

Second, I am not the expert on this. I wasn’t serious about saving until I started getting serious about my finances, which (unfortunately) was in the later part of college. I never had insane spending habits, but it took me too long to start being proactive about saving. Once I was serious about it, I got really serious. In the 8-month stretch between graduating and getting hired full-time, I saved like a maniac. At least 75% of what I earned — and more when I could manage it — got saved.

Now that I don’t have to pinch pennies quite so hard, this is my plan:

  • A static emergency fund of 3-6 months’ expenses (it’s currently at about 4 months, and I’m working on building it up). This fund is not to be touched except for emergencies, and just sits in my savings account until I should need it.
  • At least 30% of my monthly income into general savings, more whenever possible. This is a catchall pot that can be used for emergencies if necessary, but ideally will keep growing until major milestone purchases come up down the road.
  • 6-7% of my monthly income goes to repair/replacement savings, specifically for my car and furniture (though it’s in the same savings account as everything else). You don’t want the refrigerator going out to keep you from paying rent.
  • About 2.5% of my monthly income goes to “gift savings,” basically so that I set a little money aside every month and then when birthdays and Christmas comes around I’m set instead of stressed.

In total, roughly 40% of my income gets saved, plus I have the emergency fund. I realize that’s a way hefty number for some people. While saving should never be an afterthought, it should also never outrank a roof over your head and food on the table. But if you’re treating yourself more often than you’re setting money aside for the future, it’s time to reassess. Here are some ways to help:

Set a savings goal. I can’t emphasize this one enough. If you’re just saving to save, there’s less motivation to do it well. If you’re saving for something, or to a certain amount, you’ll be more likely to remain committed to the plan.

Invest, or at least get interest. If you’ve got a big chunk that doesn’t need to be touched soon, invest it in safe stocks/mutual funds that show consistent appreciation over time. (Pro tip: Appreciation means it grows in value.) If you don’t have a lot or want to be able to access it quickly (called “liquidity”), then at least throw it in a savings account. It won’t make you money per se, but it will at least keep it from losing value due to inflation.

Rule of 5s. Every time you get a $5 bill (or a $1, or a $10, up to you), that gets saved. My grandma does this, and especially if you deal in cash fairly often it can add up quickly.

Make technology your friend. Set up your bank account to automatically transfer a certain amount into your savings every month, or use a savings app like the ones that round up your purchases to the nearest dollar and transfer the change into your savings account.

Save what you spend. Anytime you spend money on a non-necessity (groceries are a necessity, eating out is not, etc.), put the same amount or even half that amount into savings. This one requires some discipline not to fudge what is or isn’t a necessity, but can help curb spending while also adding to savings.

Budget the fun stuff. The less complicated but more intense version of the preceding tip is to just don’t buy stuff you don’t need, but it kind of sucks. The best compromise is to set a budget for what you’re allowed to spend on fun stuff, and save whatever extra you have beyond that.

Immediately save any unexpected funds. Tax refunds, gifts, or any other money that comes to you apart from regular income can go straight to your savings. If that bums you out, think about it this way: it’s money you wouldn’t have had otherwise, and since it’s extra you can afford to save it! Your future self will thank you, I absolutely promise.

Saving can be a little bit of a painful and slow process, but getting set up for the future is smart, even if boring. What tools do you use to save? Let me know in a comment below, on Twitter @ohgrowup, or Instagram @oh.grow.up! Thanks for reading, and good luck adulting!