Saving is key to getting out of the ‘rat race’ 🔑
You may have noticed in the budgeting article that Annie included her saving within the budget. Well that’s the key to saving.
Not spending everything and saving whatever is left.
But setting a percentage of your income you want to save and saving the minute you get your paycheck.
A little longer, I know. But man does this change the game.
Yes, as a young person you're likely to be on a shoestring budget, and saving might seem like something crazy to you at the moment, I’ve been there myself. But saving at a young age is important for the following reasons:
1. You get into the habit nice and early
Putting away that % every month will soon be a habit for you. Whether you're working or not, you'll have that cushion early on. This cushion (or emergency fund) means you have the flexibility to live for a few months without a job - which therefore means you have time to get something you really want.
2. You learn about your priorities
What will you do with the money you’re saving? You could save up for a nice trip, for some gadget you really want.
You could save for an emergency fund or for future investments. 😛
What’s the most important for you?
No pressure to answer, you’ll figure out on the way 😉
But in order to optimise your saving, we start with optimising your spending followed by optimising your income.
Here are some simple ways of optimising your spending:
1. Reduce mandatory expenses
This means expenses such as rent, bills, tuition, etc. These are expenses you have to pay whether you like it or not, so reducing these can really go a long way.
Here are some cool articles to get you started:
2. Student discounts
If you're a student; you get some snazzy discounts 😛
By discounts I don’t mean coupon clipping, checking Groupon every 5 minutes and not buying anything that's not 50% off. Personally, I can’t be asked doing any of that.
So I built in a system where I could take advantage of as many discounts as possible without too much effort.
Check out the articles below to get started!
3. Pay Yourself First
This ‘setting a percentage of your income you want to save and saving the minute you get your paycheck’ is called paying yourself first. Since you are saving a % out of your paycheck, you are effectively choosing to put money towards your goals before your expenses.
A really great way to optimise your spending is to simply have less. Since you’re taking out that percentage automatically, you are then left with all the rest that you are allowed to spend, confident that you are reaching your saving goals.
Personally, the PYF rule changed my life. And it will change yours too once you start to implement it.
Here are some extra articles on saving that could help you out:
Next is the others side of optimisation: income 🤑. Really, there is a limit to how much you can cut expenses back, so you also want to be looking to increasing the income.
No matter your job or your passion/hobby, I believe you should have a side hustle or easy money making skills. This will give you the confidence to know that you can easily make money whenever there is the need, and it gives you the freedom to search for what truly fulfills you.
Check out the next section for more info 😛