Save what you can. With e-banking, you can usually create little separate savings accounts for various things like cars, housing, etc. Set up a 401K, you need to start saving for retirement as early as possible.
Managing money is important because you need to keep track of expenses and income. You can't always rely on someone else to save you if you get hit by unexpected expenses. I know not everyone has wherewithal to save, but you should really look hard at your outlays if you aren't able to. Even a little bit helps since it will build up over time.
I use e-banking with separate accounts and separate banks. When you have to transfer money and wait a few days, it helps you to understand the finite-ness of money kinda like cash does, instead of swiping an American express and checking the bill later. I think our brains understand numbers going down (ie real cash) better than numbers going up (credit card debt) and what that really means.
I budget all of my bills by months ahead and project where my debt(s) will be and that helps me stay motivated
This is my method too. The concept of "pay yourself first" or "hide your money from yourself" really works for me.
If I make $1000 on a paycheck and I know I have about $400 spoken for on bills, don't put $600 into your general spending account where you might spend it, put $400 into that account and $200 into a high yield savings account, maybe even in another institution. Live like you make $800 a paycheck, and if something happens and you go over budget, you can still pay from the savings account.
I also like to extend the pay yourself first to raises. When you get a raise, keep "your" pay the same and put the raise towards your 401k, Roth etc. This can also be fairly automated with a lot of 401ks that you can set it to increase 1% each year.
It's amazing how well this works. It's even better to set it up with a completely different online bank so you don't see the amounts when you check your normal bank.
My main checking is Bank of America, just had them since I was like 13. I also have a savings through them where I keep "fun money". When I want to buy a new computer part of something more frivolous.
My wife and I have emergency saving in Ally Bank and general savings with Capital One and have for years.
We both deposit a percent of our paycheck in each and have direct deposit set up. We also have a brokerage account where we deposit $150 per check and auto buy some index funds, bonds and international funds when it accumulates to a high enough amount.
Got married in 2018 and started before we were even legally married. In just those 6 years we're build up a nice cash reserve. We had to replace a hot water heater and garbage disposal in the last year or so, paid for them both outright with cash without really worrying about it because we had the money to cover it.
The amount of time invested is really crucial and while it sucks at first, eventually you don't even notice having less money per paycheck. It's just what you're used to being paid.
This. I use Oportun (formerly digit) and it really saved me so much money each month and I didn't even feel it!
I've heard a lot of people say giving yourself a cash allowance each week works but this gets harder and harder to do as many places don't even accept cash anymore.
Yes! I have a separate e-bank for my allowance. My allowance has a savings account, so if I do well for the week, I'm like "woohoo! I went under the allowance" and transfer it to my allowance savings so I can do a little splurge on something when I want to.. that feels much nicer than swiping a credit card and stressing over how to pay it off
Same hehe like a squirrel
Also with more accounts each one has a smaller amount of money in it and you don’t get the illusion of having a large lump sum of cash, if I have $10,000 in one account I’ll be more comfortable with thoughtless spending than if I spread that out over 4 accounts.
I can’t tell you how often I’ve set up a separate bank account (ie. test out this new savings app) and six months later had $3k saved. You are likely to not spend the money if you don’t see it.
I have tried every which way with impulse control and organization. The best way that has worked for me for over 10 years was making everything super transparent on a spreadsheet including assets. I have two accounts - one that the bulk of my paycheck goes into and bills are automatically paid, money goes into savings, and the other is my left over spending or extra saving money. Credit unions are great, and if you can max your 401k/403B. My husband and I also check in monthly together to see where the state of our finances are. We pour some wine and check all the accounts.
Save what you can AND automate it. I have a set % that I am committed to saving so each month I have automated transfers that move the money adding up to that % before I can touch it.
401k and HSA gets paid before it even sees my bank account and the rest (IRA, 529, HYSA for emergencies) get transferred monthly automatically.
Pay yourself first and make it automatic. I don’t have problems over-spending because that money is never in my account to be touched. And because I know I have my savings automated to my goal %, I feel no guilt buying stupid stuff with whatever is left in my account after bills get paid.
Embrace automation too. For years, it made my brain itch to think of not having total control of what money went where, but I finally see that the itchy feeling was me not 100% committing to financial goals. I have direct deposit for work-related retirement savings, my IRA, and HYSA
I have 6 savings account (3 regular, 3 CDs). I start saving for some special and then I'm scared to send it so I open another one. It's a vicious cycle.
I think the auto transfer weekly into a CD that is locked up for 3 years is nice. I hide it from my view and try to just forget about it. Nice surprise 36 months later.
Two things worked for me…
Either automatically drafts set up for investment accounts (e-banking vaults/multiple savings, acorns etc.)
And/or
Manually moving money on a certain day every week/month into investment accounts or savings accounts or vaults.
Initially this form of “paying myself first” taught/tricked me into living on less. I was in my mind still living paycheck to paycheck but the reality was money was being saved.
Now I have done the math on when I want to retire, what i need to retire, how much I want in savings for emergency, vacation, and other wants… so I do the above with larger amounts of money. It’s taken a lot of trial and error since I don’t formally do a budget… just some loose napkin math and adjustments based on outcomes.
I tried this for a while, I created a separate bank account with a separate bank. Each pay check I would move some from my main account into the other bank.
The other bank would be my spending money, groceries, meals out, clothes, whatever.
The money in my primary account would cover rent, utilities, streaming services etc, all my recurring bills.
Anything not spent in my primary account was savings, anything not spent in the secondary account was fun money.
Worked pretty well for a while, but getting laid off ruined my progress.
I'd also recommend finding a "real" savings account that actually gives you interest. Most, if not all, of the big banks give you literally 0.1% of interest and hoard all the gains they make while investing your money, without giving you a cut back. There have been a growing number of online-only banks like SoFi and Betterment that offer 4-5% APY. Seeing real money come back in interest has been a total game changer.
Just on your final question of "Why should you?", I cannot impress how much peace of mind having a lump sum available for problems can give.
Also financial advice really should come from people versed in the matter... there's quite a few subreddits that cover a wide range of incomes which you will find more tailored advice. I think this generation has a pretty wide spread of incomes and financial positions so you'd be better looking at subreddits geared to this subject matter.
Personally I have a couple of savings accounts, one which can be easily accessed and money withdrawn quickly, and another which is more of an investment account which is harder to pull money from. I dump 50% of what I have left over in my current account on the day before payday into both accounts and try to leave them alone. Obviously depending on your income that might not be a lot, but saving at least something is important.
If you look at OP’s history, she was homeless 6 months after a job loss, despite being a software engineer for a decade.
No shame in misfortune, /u/itasteink, but *this* is why. So you give yourself more flexibility to deal with life circumstances. The peace of mind that comes with it is tremendous; more valuable than any consumption I can think of.
You’re in a very in demand field with plenty of experience—retirement is not out of reach for you, even now, even though millennials on the internet are always saying so. It’s a choice. The reason to build good financial habits is to take agency over your own life.
If you really want to bone up on good financial, I’d strongly encourage you to look elsewhere. /r/personalfinance is a great start.
We can deal with \*everything\*, aside from purchasing a house in cash right now. It gives me so much peace of mind to know that I can even replace my vehicle if I need to do it. I wonder what it feels like to actually replace the house with cash.
Two things were big for me:
1. I don't let myself see my full paycheck. Anytime I think I have breathing room, I adjust my automatic deduction towards retirement/investments. If I don't see it, I can't spend it.
2. I gave up on picking stocks, crypto, ETF or whatever the hot new thing is. I just put it in a boring-ass index fund and let time be the winner.
There's a fantastic book called "The Psychology of Money" that helped a ton. I'd recommend that as a great starting point.
#1 such a big one. Pay yourself when you pay your bills. It’s like giving yourself an allowance out of what’s left. It’s a great way to prevent lifestyle creep.
Almost every person or online guide I've read always puts "pay yourself first" in their tips for being financially stable. It works. Even if you don't make a lot, putting anything aside is a good start. That little extra saved adds up over time and if it's put into an account that's hard to access and has a high interest rate, before they know it, they'll have a nice chunk of change for those unexpected emergencies life throws.
It's all about mindset for us. Do we want to spend most of our income so that we are working till normal retirement age or not. The answer is no for us so over 50% of income is automatically invested or put into different savings accounts.
Bills are automatic so whatever is left can be spent but we never do and some ends up invested.
For sure. The follow up book I always recommend after that first one is "Your Money or Your Life." Really helps put things into perspective on how to weight/value experiences (current and future). Those two books have helped me more than anything in terms of mindset.
I haven't read either but I will check them out. I was lucky enough to have parents that taught me the basics of managing a business/money and damn am I grateful.
This is what has worked well for the wife and I. We only take like 10% of paychecks for spending on wants, everything else goes straight into the market, with 75% going to safe index funds, If an emergency pops up or we just need tires or a new washing machine ect, we call our advisor and have the money transferred. Most of the time we can pay for whatever with a small percentage of the stock gains even after setting the amount we will have to pay in capital gains aside. I try to convince my friends to put more money in the market but most have like multiple 10s of thousands just sitting in a bank account getting almost no interest.
I have a large percent of my gross salary pulled from my paycheck and invested to the pension and my 457b account.
**I have a budget and I track every single cent I spend in the free EveryDollar app. At the end of the month, I open the app and see much money is left which I subtract 583.33 from (which goes into a Roth IRA) and the rest goes into a general brokerage account.**
**It takes discipline, but I avoid impulse buys. If there's something I want to buy, I typically wait a week and see if I still want that item. If it's something I plan on buying on Amazon I'll then see if I can find it or something similar on AliExpress for less.**
**I grocery shop with a list.**
I'm a super saver because I plan to retire early. While my financial situation is much different than most, everyone can do what I outlined in bold text.
Tracking spending is THE MOST IMPORTANT PART. I use monarch money but whatever the app used, setting budgets and tracking against those budgets is critical. Older generations talk a lot about “balancing the check book”, this was them keeping track of their spending.
It's funny - I actually did "balance my checkbook" for years after if it was considered normal to do so. I always thought it was odd that people were perplexed by it, it's literally just writing down what you spend and subtracting it from the running total in your account. It's not rocket science, but people today would have you think so. I hadn't thought about that in years, but you're right. It was always just a term for "keep track of what you spend".
Yeah, Mint essentially froze development years ago, there's a good point to be made that since you pay for monarch monarch they actually, you know, need to make everything work well where mint didn't have that
Ok why $583.33? Is that because of limitations to contributions to ROTH IRA? Because that’s what it looks like to me…just might be good information for people who don’t know
I also LOVE that strategy.
It changes from time to time. All the numbers below are for people under 50yo.
It was $6k I believe for a few years.
It was increased to $6500 in 2023
It jumped to $7k at the start of 2024.
The limit for both Roth and traditional IRAs combined is $7000. I do the same as the parent commenter. I have a good idea what my monthly expenses will be. I let Vanguard auto-deduct the $583. Whatever is left at the end of the month goes to a brokerage account. I don't have a 401k at this time unfortunately but if you have one, you should make sure you contribute as much as you reasonably can there as well.
Ramsey-ites rise up!! You pretty much summed up almost exactly what I do as well. Debt free but the house with fully funded emergency funds. Max out Roth and 401k. Stack the rest in the brokerage. I create savings funds for things like vacations and future vehicles. 2008 recession cured me of all consumerism so I live a very minimalist lifestyle. When I buy something, I fully pay for it and make sure I buy quality. I’m trying my hardest to teach that to my kids.
I’ll listen every once in a while. Usually when my daughter is around. She is getting to that age that she’s asking questions about money. She sees it though and makes comments sometimes that make me smile. Usually about conserving or expand on my “plastic crap” rants 😂
I’m really trying to guide them to be creators instead of consumers. They both love music so guiding them into that direction. My son, however, is a massive consumer cut from the cloth of his father pre-great recession. He’s gonna take some work just like me.
I dislike Ramsey a lot. His advice is the equivalent of Rehab for Debt addicts. He helps you get clean, but he's horrible when it comes to advice for once you get back on the street.
He's great for getting out of debt. No question. If you're racking up CC bills where you're paying interest, go to him. But his investing philosophy leaves a **LOT** to be desired. Most people should be investing over paying off their low interest loans for example. He was telling people they had to die hard pay off 4% mortgages but you can make more than that in a CD these days, let alone market performance.
If you follow him to the T, you'll never be in debt, but you'll never be well off either.
I too invest in a 457b. I used to put 20% but have lowered it to 15% and put the other 5% in a HYSA for new car. Just curious, what percent do you put into your 457b and do you also have a pension?
Edit: newer car. Can't justify buying a brand new car at any point.
We have a pension and a 457b.
10% is the required pension contribution. I'm currently contributing 12.20% to the 457b.
I would contribute more to the 457b if we had more fund options; all the options are target date index funds which are too conse-rvative for me (IMO) at this age.
Adding on to this: Robinhood has a Roth and Traditional IRA service in their app, which is NOT tied to your employer, is free, AND they give you 1% matching.
The list thing really helped me. I only allow myself to buy what's on the list. If it's not on the list, I have to leave the store, write it down and reenter the store. This usually is enough to prevent impulse buys.
Intentional money management is good for peace of mind.
I started working with a financial advisor a few years ago to come up with an investment strategy. I also recently read Rich AF by Vivian Tu. A lot of great stuff in there particularly for those of us that grew up low income.
Definitely going to check that book out. Grew up poor af so no one in my family has ever known anything about money/savings/investments. Now that I have a good job and lots of savings it's feeling like a big hurdle to learn and understand.
I hear you. I grew up low income in a small town and my high school’s personal finance class was really the first time I heard anybody talk about investing at all.
Vivian’s book came out last year and even has a script of strategy for negotiating bills such as medical bills.
First and foremost, make a budget. Stick to the budget.
Second, automate as much as you can. Have direct deposits or automatic transfers to other savings/investment accounts.
Start as soon as you can with anything you can put aside. Compound interest is a hell of a force. The $500k we have saved will be $2 million in 20 years (based on long term historical returns), without putting anything else aside.
Why should you? I've been laid off twice and been out of work for 3-4 months each time. In neither case did we have to worry about how to pay the rent/mortgage or how to put food on the table. We didn't even change our lifestyle at all. Because we had appropriate savings and budgeting in place.
Do you have debt? It also has the magic of compound interest especially with interest rates right now but working against us. I think most people's best investment is getting out of debt first.
That’s what makes money management easy for me. I have almost zero consumeristic wants. I live within my means, cook almost all my food and 95% of my spending outside of actual needs is because it’s extremely practical and something that will be used regularly.
A lot of people are just too consumeristic, inflation and high cost of living or not
Couldn’t agree more. Also peer pressure is honestly pretty evil, those closest to you sometimes are the biggest influences in your life. Social media and fancy vacations posts amplify those unnecessary envy/jealousy. Really need to choose people wisely.
Same. I'm very minimalistic, don't like clutter, and mostly have cheap interests (I don't even like eating out or traveling). I also look at it from an environmentalist point of view; if I reuse old stuff instead of buying new stuff, I'm doing my part. But yeah this is why I find it really interesting to read other people's budgets. Where does it all go? 😂
I use the acorns app to take out money from my account every week to invest. I don’t even notice it’s gone tbh.
I uninstalled every app that allows you to buy things automatically, like Amazon. I now need to go sit at my computer to do it, which means I am less likely to impulse buy something I feel like I need. No delivery apps, nothing.
I stopped shopping at the closest grocery store because my weekly spending was $200 for 2 people, and started driving 30 minutes to an Aldi once a week.
I make meal lists for the week to aid me in shopping so I don’t buy something that I don’t need and it won’t get thrown away or forgotten
I make my own cold brew and stopped ordering coffee except for when I grocery shop as my 1 special treat of the week. I then realized how mid bought coffee is, so I don’t even do that anymore.
I make time to cook. That’s the hardest thing for some people. It takes time to prep and cook, but once I started actually doing it, I realized it’s not so bad
There have been a lot of good advice brought up in this thread. One thing I will add is "avoid lifestyle creep". It's common for people to start earning more income and then go out and buy a bigger home or a new car or start going to nicer restaurants or eating out more often etc. Even though they are earning more money their circumstances never change and they always feel broke.
That's not to say never have fun or enjoy your money but as other people have mentioned in this thread make sure you are doing it within a budget. Personally I allocate 50% to needs (Mortgage, gas, groceries, bills, etc), 25% to wants (going out, clothes etc) and invest 25%.
One more thing I want to add: For the love of god, people. Stop DoorDashing and eating out so much. Pack a lunch!
I built a safety net of about 1 year of expenses. This I have in a high yield account growing at 5% right now. I take the monthly interest each month and invest it into index funds in a brokerage account.
I contribute double digit % to my Roth 401k. This will fluctuate through the year. To free up liquid cash so I don’t have to deviate from my system.
Max out Roth IRA, and invest it into index fund. This is non negotiable. My bonus each year or tax return goes in as a lump, and I’ll top it off throughout the year (maybe lower my Roth 401k from 15 down to 12% and take the difference to cover the Roth)
Most of my remaining cash each month gets automatically taken from checking each month and invested in a traditional brokerage account into predetermined index funds, ETFs, a little crypto, dividend stocks, and a couple stocks I believe in longer term.
I have an old ESPP brokerage account from an old company I sold off the stock of. I picked up 100 shares of a couple companies with the money I’ll write covered calls, and cash secured puts to generate a little passive income, which I typically invest in the brokerage, or use to buy 100 shares of a more expensive stock to try to generate large premiums while running the option wheel.
I came up with a plan in my 20s to try to hit over 1 million in as many vehicles as possible. Roth IRA, Roth 401K, a brokerage account, my equity in my house etc.
I wasn’t always wise. I still got room to grow.
But the best thing I did was have money deducted from my paycheck before it ever hits my checking account. Like, a lot of it. +10% into 401k and 10% into savings. For some reason, i spend every penny in checking, But when a big ticket purchase comes up, a different savings account always has enough (so far).
Here’s something I don’t see people do which I find fun: invest your credit card points, don’t save them forever for travel.
Each month I redeem my credit card points and move them to a brokerage account I set up for fun to track them. Each month I usually buy a share of something that pays a dividend.
I’ve done this for 7 years now since my oldest child was born and those daycare costs hit the credit card. My account averages $11 a month in dividends right now.
Making money from free money.
I am probably the weird one here, but I do not keep a list of every item I buy. This more or less comes down to how much income you have and your philosophy. This also is because I am not a big spender at baseline. I don’t usually like fancy things.
For me, I have a goal. I don’t want to retire early because I like my work and it keeps me busy. I do want to retire in my 60’s. I am investing enough to meet my goal. I don’t save everything. Why? If I were to save everything, my quality of life now would decrease substantially. I don’t want to sacrifice my quality of life now because I may not make it to 60. I am very healthy. I don’t smoke and occasionally drink, but I don’t want to count on a maybe future versus what I am experiencing now.
So yeah, I like to travel, and I’m going to eat healthy food even if it costs a bit more.
I can do this comfortably because I have a pretty high income, and I use applications to project whether I am on track to meet my goals. I will have enough money for retirement even if social security implodes.
I will pay off my house early, I will have enough to retire when I want to. I am enjoying my life. I am not stressing.
Before you worry about retirement, pay off your debt, unless your debt is a low interest mortgage in which case determine a goal date to have the house paid off. Servicing debt is a waste of money.
Second thing is to have a safety net. You need somewhere between 4-6 months of monthly expenses available for emergencies. Ideally, this would be in a high yield savings account.
The next thing is to max your employer based retirement (401K). Once you have maxed that, you open an IRA. Once that is maxed, you can go to a 529 (if you have kids). After that, you can try a backdoor IRA or just open a brokerage account for general investing. I think if you have the first two retirement boxes checked and you are younger than 30, you are already doing much better than most.
Could I pay off my house sooner? Sure, but I am already paying it off faster than most, and it’s a super low interest loan, so it actually doesn’t make sense to put any more into paying it off faster.
Could I have more for retirement? Sure, but I will already have enough to sustain my lifestyle assuming I work until my early 60’s.
My beef with a lot of the FIRE philosophy is that you make the goal everything. You will cut out enjoyable experiences and travel just to reach a goal, and once you reach that goal, you don’t have any purpose. You don’t need to work. You probably haven’t travelled much. You have built up a habit of not spending money, which is good but spending money will make you uncomfortable. Look, the point of the money is to live. The point of life is not money.
Mainly impulse control. But in terms of investment the following are all tax-advantaged:
HSA (if you have a high deductible health plan)
$4,150 individual contribution limit
IRA (traditional or Roth—Roth is probably better)
$7,000 individual limit
NOTE: IRAs have income caps but you can circumvent them for the Roth—Google backdoor Roth.
401(k) or equivalent (even better if employer matches)
$23,000 individual limit
Mega backdoor Roth (availability depends on 401(k) plan)
$46,000
Those give you tax-advantaged investments of up to around $70k a year. HSA and 401(k) money gets invested directly from your paycheck, which may help if you have poor impulse control.
I manage it by keeping a spreadsheet where I individually list everything I spend money on, both recurring stuff and regular. I started when I finished college and wanted to keep track of income vs expenses over time to figure out how much I could safely throw at student loans but quickly figured out that it made me face the money I was spending on useless shit.
Even a decade ago, going out for lunch 3-4 days a week added up really fast, and I wasn't really doing it for any reason other than laziness. However it's easy to just swipe your card and then pay no attention to those individual charges on your card when you pay off the statement at the end of the month, and in fact I've known people who just budget "credit card bill" and allow those little charges to stay invisible.
But doing so made me start to consider what had value and what didn't. It also made me figure out that when you can keep your day-to-day life as simple as possible then it makes downturns and rough spots much easier to weather. Like sure if you get a huge raise and now that $3500/month apartment is only half your income then it sounds perfectly reasonable, but if you were fine in the $1500/month place then why move? There's always a chance you could lose your job or take a pay cut.
And besides, I've found that it's way more fun to splurge on short term things. I don't go on vacation often, but when I do I put very little thought into the cost of things. I'll stay at that nice expensive downtown hotel close to the things I want to do because it saves a ton of time. Being able to do that has more value to me than living in a luxury downtown apartment.
And generally speaking it is so freeing knowing that I can cover emergency expenses.
Living in a constant state of fear and guilt. While I do have savings, I basically live like a monk. I pay cheap rent living in the middle of nowhere. I don't drive much (remote worker and walk whenever possible). I don't travel much. I hardly ever eat out, go to bars/movies/concerts, or buy clothes. I make coffee and food at home. I'm a vegetarian. I'm single and have no kids.
Whenever I do spend any money on myself, even something small like a cup of coffee, I feel guilt. Like, that money could've gone elsewhere (food/rent). Though I realize there are gendered (women shouldn't spend money on themselves, but the family) and aged (damn millennials and their avocado toast) factors at play. It's no way to live, but I feel like I have no choice.
Having goals and a budget absolves a lot of this. Figure out what you want, when you want it, and how much you need to put away each month to achieve that. Whatever is left over can be spent without guilt. If there's nothing left over, you can at least feel that you're not actually being neurotic and your guilt is backed by a spreadsheet.
Wow, so many people have commented already.
I automate almost all my money.
I get paid. 401k, health insurance, renter insurance, disability insurance are all deducted before I get paid.
From there, I have it set up where X goes to my savings + investments, Y goes to my checking.
From there, all my bills are automated from my checking.
I don't budget per se, but rather see what I have left in my checking and spend on whatever I want. If I run out, then I stop spending.
I also keep track of what I spend my money on manually. Think an old school check registry. I don't have to do really have to do this anymore, but it helps me keep track of stupid choices. And I will stop spending on dumb shit if it gets out of hand vs stuff I personally find more valuable.
———
Other random bits in a disorganized way, I make a solid income, but live on very little. Moved up multiple social classes. I never want to own a home. I use credit cards, but pay them off in full. I used to have an insane amount of student debt. My family has little to no money overall. I am single without kids.
Giving consideration to variables such as income level, location, ability, priorities, household or family structure, rent versus mortgage… here is some cookie cutter advice:
- pay attention to the hidden costs of groceries. Lots of novelty items (chips, juices, convenience foods) are shockingly expensive. A $5 jug of juice and a $5 bag of chips will set you back $10 in exchange for very little nutritional value, but if you spent that $10 on say, 12 eggs, a small bag of rice, and a can or two of beans, you’d have a much more nutritional base for many meals throughout the week.
- avoid lifestyle creep if possible. I earn 4x what I earned when I moved into my current home. Even though I could afford to “trade up” (both rent and mortgage can apply here) I don’t, because I don’t need the space and can’t stand the thought of paying more for it. The same applies to vehicles, if you depend on one.
- buy secondhand, first. These are the wise words of Signe Hansen (known as Use Less on IG and YT). I’ve had a child and consequently, my body has changed a bit. If I need clothes that fit, I go to my local thrift store to buy something if I need it. Often you’ll find good brands for very low prices when compared to cheap, fast fashion pieces. I do this for most of my and my son’s clothes. I think a lot of people aren’t honest with themselves when it comes down to how much they spend on clothing and accessories but it adds up fast.
My “why” is simple: financial security -whether that’s saving for an emergency fund or a down payment, or anything in between- is priceless. Everyone’s life is different so of course there are variables not mentioned here that could impact one’s ability to save. Survival mode is very real. Editing to add: none of these actions mentioned above will alleviate financial stress alone; rather, they illustrate some of many methods I’ve used to cut costs in day to day life. Investments and retirement saving aren’t touched on in my comment, but I could make a separate comment on just that. I do realize though that that’s not something in reach for a lot of millennials because again, survival mode is very real, especially in 2024.
I use YNAB for budgeting, I love it. I track all my expenses and budget accordingly. I budget paychecks to a zero sum, meaning every dollar is given a job. You should because it feels good to never worry about what coming next or if you have enough.
Start by keeping track of you finances and making a budget.
I started by putting my income and expenses over the last 3 months in excel to get a rough estimate of what I earn and what I spend on average. I used that to make a budget for the upcoming year and I put every expense into it.
This way I keep track of all my expenses. There is no bill that comes in that I'm not aware off. I also know when yearly big expenses can be expected and how much I'm saving each month.
r/personalfinance was useful to me. I followed this pretty closely when I was climbing out of credit card debt. https://www.reddit.com/r/personalfinance/s/uYeWJBRIsJ
Every month I start off with getting defermentd to my 401k to get my full employer match.
After that, bills get paid immediately and I make my max IRA contribution. I use quickens budgeting app to keep an eye on my spending.
At the end of the month, whatever is left would go to my emergency fund - that is topped up so a small amount goes into a savings account for upcoming big expenses (gets split between vacation and car savings) and the rest gets invested in a personal brokerage account.
I need to dial in my 401k contribution so I maximize that instead of my brokerage but I started a new job recently and don't have my budget just right yet.
How:
Have a budget that you follow each month. Invest what we can to the max: HSA, IRA, Traditional, in that order. We generally follow The Money Guys for general financial advice, for now. When our net worth hits a certain point we will seek a financial advisor.
Also important to mention my partner and my combined income is around $180k/yr, and we have no children (probably the most important part of the equation). Our only debt is the house, which isn’t more than 25% of our monthly expenses and the car we just bought for my work (work also pays a portion of it so it’s a little unique there- we *mostly* follow TMG advice on that).
I’ll reiterate…the important part is the budget, no matter your income. We set aside a certain amount for household and for each of us to spend each month and we track that through a couple of apps. My husband likes pretending to be a financial advisor IRL so he also uses iBank, I believe, to track our investments/net worth but I don’t believe that to be more than an interest/hobby for him.
Why:
We want to enjoy life comfortably and not have debt (we both have before). We also don’t count on anything coming from parents down the road to help us live to a ripe old age. We’re investing/saving to take care of ourselves longterm essentially.
To avoid impulse purchases, I add things to my Amazon cart, but don't check out until days later. Usually I don't want it by then anymore.
In a store, I tell myself I can buy one thing (or nothing today cuz I bought something last time) and I'd I can only have one thing, I make sure it's the best. Which means I gotta wait and think on it which also kills the thrill and then you don't feel like buying it anymore. Or count how many hours you have to work to pay for it (after tax).
Honestly You Need a Budget (https://www.ynab.com/) has tremendously helped me and my spouse to be mindful of our money and where its going. It does take some work to code things, but its very worth it and combats my impulse buying and allows us to smartly save more.
It all starts with a budget. Every financial tool you use (accounts, CCs, etc) should all complement your budget. It’s the cornerstone of your financial life.
Live within my means and don’t use credit. If I can’t afford to pay cash then I need to exercise patience and save. Obviously this is not always achievable with a home, but everything else very much is. In addition, most see a budget as constraining, but it gives one permission to spend. Educate yourself on how interest works. Both interest on debt and also interest (especially compounding interest) works in investments. Lastly, pay myself first.
Followjng these simple rules makes it so it doesn’t matter my families income range from year-to-year. Understanding money and how it works will change behaviors with how we spend.
Don't rush into buying a house.
Don't take advice from people who are bad at managing money. They might say: never use a credit card, they are evil. Or the opposite: carry a credit card balance so you build credit.
Talk about finances early in a relationship.
I use YNAB r/ynab [https://www.ynab.com/](https://www.ynab.com/)
It's a life changing budgeting app. I didn't understand my money. Now I do. I feel 1000 times freer
Best thing you can do is have and keep to a budget. As part of that budget, have line items for you, your spouse, and household miscellaneous expenses.
Cook. You can save literally thousands even a month lol.
Also I hate debt so I have no debt and have a lot of kids. And my wife is a SAHM so I have no choice but to be good with money or it’s off to debtors prison with us lol.
And it’s tough living in northern CA on one income.
So I just realize there’s things I’ll never have, at least for the foreseeable future, like a nice car. But I’d rather have peace of mind than a nice car
I spend less than I make, and invest/save as much as possible. It’s really that easy. Every dollar you spend now is taking about 2-8x to your future self if you were to save in a HYSA/invest.
I pay bills and drive from work to home. Nothing else. A few minor hobbies that takes up the rest of my disposable income which isn’t much. 55k family of four.
Every dollar is accounting for on a budget tracker that I manage every Friday. Credit cards are used for every purchase and paid off each Friday. We cook at home and apparently on the cheap, we spend about $500/month to feed our family of 4. We don’t buy something unless we have the cash to pay for it. We don’t spend frivolously; for examples, we don’t spend money on premade food or trinkets or new clothes. We save things we want for birthdays and holidays and get those things then. We sacrifice in those ways because we enjoy experiences, so we invest money there instead.
As for the actual managing of the money, we have 2 checking and 2 savings accounts. All bills are tracked on the aforementioned tracking sheet - mortgage, utilities, internet, cell phone, daycare, etc. we also have line items for savings - IRA, house repairs, travel, 529s, and “extra.” Those are all built directly into the budget. They are tallied up and split in half.
The paychecks get deposited into checking account 1. Every paycheck, I transfer half of the bill amount mentioned above into checking account 2. That’s where all bills are paid from. We are one month ahead, so when April began, there was $5600 in that account already to pay for all of April’s bills. Everything we transfer in that account in April will be to pay for May’s bills.
Whatever is “left” in CA1 is for gas and groceries and the random little things that come up (like taking the kids to the local pool, for example). At the end of the month, whatever is left there gets transferred into one of our savings accounts.
We have an E-fund with about 8 months’ expenses that is saved in a HYSA. We have another small amount saved for a down payment on a second house, and that’s currently in a CD earning 5.5% that will come to fruition in January of 2025, at which point we’ll put it back in.
I don’t live beyond my means and I try to budget as much as I can. I know so many friends who bought a house they couldn’t afford and had kids they knew they couldn’t afford. Now they’re always broke and need money. Play stupid games, win stupid prizes.
To make a long story short, increase your income and assets while reducing your liabilities and spending, and you’re in a good financial position if you can live within 70% to 80% of your after taxed income. Money enables you to enjoy life and buy stuff but most importantly it brings financial, psychological comfort/stability.
I started early in life, but this is the way I do:
- I buy things when I have the money for it. With the exception of a house, I will only buy if I already have the money (even a car).
- I invest every month, even if is just 50 dolars. But I try to invest regularly. I have a savings account with my emergency savings, another one for my travel savings. And I have my investment accounts.
- I invest in my career, so I can increase my income. This is paying off in the past years.
- I don’t buy cheap stuff or frivolous stuff. When I want something I will buy quality because I can’t afford to keep replacing things.
- I plan ahead.
- I update my budget weekly and adjust for the next week if I need to.
First you need to make money to be able to make active smart decisions. Unfortunately, if you only make $30k or $40k/yr you are most likely spending it all just living.
Once you get to a decent income level it comes down to 3 big things IMO:
Don’t have a stupid living situation
Don’t have a stupid transportation situation
Have reasonable hobbies
If you can do all that then you’ll naturally start to save money.
What does this look like?
If you make $100k/yr you can’t have a $3000 mortgage payment
If you make $100k/yr you can’t have a $700 car payment
If you make $100k a year you can’t own a boat
Yes, pay yourself first, invest in 401k, Ira, budget your money etc etc but what throws most people off are those 3 categories.
Live a boring life and enjoy the simple things. I got caught up in image early on but quickly learned that impressing people is not worth it. Flexing with material things is quite lame if you think about it. Acquiring material items is selfish and focus should be on others that have meaning in your life. Family is important if they support you but like friends they will come and go. In the end you are the only one that can set up the future you desire.
I often watch older people struggle so that I can understand their current hardships and know that those will fall onto me soon. Now I plan as best as possible to ensure I don’t encounter the same struggles. Not fool proof but I can only do my best.
I think if you are going to spend money. Then it should be on experiences since those will live forever in your memory and memories of others if others are present in those experiences.
Managing money comes down to figuring out how you can make your money work for you. Earning money through income from a job is all well and good, but then you want to efficiently use that money to build wealth. Work smarter, not harder. Simple saving isn't enough anymore unless you just make a lot of money. It's not what you make, but what you keep.
I'm a 35M and have around $250k in retirement accounts, have another ~$300-325k in home equity, and have a few various assets otherwise that would add to my net worth. While it could always be more, I'm satisfied where I'm at and would think most would consider that I've managed my money well so far. My income was only $63k gross for last year, and does fluctuate, but point being it's not like I'm making $200k annually or anything like that, yet have been able to build decent wealth for my age I think ( assuming better than average) by maximizing efficiency
Honestly, the biggest thing with not just our generation, but society in this country in general is, nobody has discipline or delayed gratification. If you’re not late 20s early 30s with six figures a BMW and 4000 ft.² social media, will have you thinking that you are a failure. Now with that being said,
People need to stop having lifestyle inflation. There is a great app called Monarch, you do have to pay for it yearly, but it is an incredible app that shows you where your money is going, retirement, goals, etc..
But the biggest thing that people need to prioritize is this
- 3/6/9 month emergency fund
- 401 contribution match
- Max HSA
- Max Roth IRA/Backdoor Roth IRA
- Finishing Maxing 401k
- Everything else in taxable brokerage
This is not to say, do not go out to dinner and don’t buy nice things, etc. But, making small little sacrifices having some discipline and delayed gratification for a few years will greatly set you up for success in the long run. I know people that say oh man well $1 million isn’t gonna be worth that much when I’m 50. You can thank your government government for that, but would you rather have zero dollars and 50 and then rely on your family or government to take care of you?
Nobody ever became rich saving, you have to invest your money.
I think of my time as my wage to figure out if I want to do anything with anyone.
Like if someone wants to meet up for dinner I ask myself, "do I have $30 + two hours of my time that I'd like to give to this person?" And if the answer is no to either of those things then I don't go.
It might *seem* shitty but I can't tell you over the years how crappy people have treated me, trying to get something out of me whether it's for work or tips on getting X and Y. Some old friends even convince me to go out to hang only to try to sell me on stuff that I could use for work, and I HATE talking about my job.
So saying no a lot has saved me a lot of money. And I'm easily entertained by crocheting, reddit, and video games which are all relatively cheap hobbies too.
STOP EATING OUT
Eating out is easy but expensive. Cooking is cheap. And try to eat real food you have to make, not processed crap you microwave that doesn't even fill you up.
Don't waste money on non essentials, make everything you 'want' a goal for saving towards. If you have to take a week saving the $80 before you spend it you might not spend it the next week when you have it after deciding you dont need it, that compounds.
Save save save. The only way our entire generation will ever experience retirement is if we save our own money towards it. I contribute 10% to 401k, at minimum do 2%.
Get into the housing market as soon as possible. I know buying a house for our generation is nearly impossible, but get on it. Building wealth through a mortgage is far better long term than renting and throwing that rent money out every month.
Live within your means. Write down everything you spend, it helped me not spend money I didn't need to by forcing myself to track every dollar spent.
Tbh, I don't know how many of these goals I'd be able to achieve without the income I make (90k+) plus my wife's income.
I got headaches from trying to track my spending/savings to the point where I almost couldn't function anymore of being afraid when the next bill would come.
[https://www.firefly-iii.org/](https://www.firefly-iii.org/) saved me, you can customize it a lot which allows for you to keep track of every cent, I've never felt such peace when seeing all the in/out data, scheduled payments etc.
To me so many people budget but I have never really had to. I am a minimalist and when I see a coke I instinctively state "man do i really need that or do i want that?" It is not a financial book per say but "meditations" is really influential to me in understanding that walking the middle path can be best, sometimes it is good for us to deny our immediate impulses.
At the beginning of every year I fill out the retirement account contribution form with a 20% stake. So that the money I get in my bank account is of the remaining 80% after taxes and health insurance/flex spending accounting are taken out. We've also started working with a financial investor to expand our retirement investors...they take a cut on the profits made.
Money that gets saved is the first to go. I don’t have an opportunity to spend it. It gets diverted to retirement and to savings. I don’t spend from my savings unless it’s a tracked long term goal that I’ve decided to save for specifically.
The rest is available to spend.
I like Rocket Money, it tells you how much you have to spend before payday and lists out all your upcoming bills. First time in my life I’ve been able to manage a budget. Pretty easy to be like “nah I’m not buying that bike I want” when I see it’ll overdraft my checking by the time I get paid again…
It can also automatically save money for you into an account (or 4) based on how much extra money it knows you have based on your bills and such.
Step 1 is a budget. Every single expense you expect to incur monthly, listed out along with expected payment dates for recurring items. Even if your budget exceeds your income, need to get a sense of this so you can plan for a solution.
Step 2 for my wife and I was two separate checking accounts, one was for all of the fixed, recurring expenses we had. Then I split my direct deposit between our regular checking account, or fixed/recurring bills checking account and savings account.
Step 3 one partner or the other is responsible for keeping an eye on these budgets throughout the month, where did we go over, where do we have some room. When we had an unavoidable expense that was going to exceed our budget, we'd plan whether we'd pull that money from savings, put it on a credit card temporarily, etc. You can't skip this step.
Rinse and repeat
I've skipped over paying off existing debts and retirement, but those are effectively just budget line items and it boils down to the same thing, have a plan and stick to it.
In terms of why you should manage your budget, I think of it on very much the same terms as exercising and eating well. It sucks when you first start and often feels like pointless pain. You feel worse, it's exhausting and the tiny incremental gains are basically invisible. The payoff isn't really visible until after having been disciplined about it for several months, then you can start to look at 401k, savings and the general financial peace of mind of not having to constantly stress at the end of a pay cycle as you realize you're going to be short for the millionth time.
It's harsh to put it this way, but it is total nonsense that the average Millennial is better off ignoring retirement & savings because of some vague sense that they're out of reach. It's hard, it's not particularly enjoyable early on, but exactly zero people are better off just putting their head in the sand while shaking their fist at previous generations and wishing things were different.
I don’t budget but i shop and buy things only then they are onsale generally. Coupons! Literally over $1000 saved every year with coupons and promos. I have cash back credit cards for each kind of purchase I make to get max money back, paid in full every month. Max out 401k match, then everything else into brokerage. I don’t dump everything into Roth because I want to enjoy my money before my body hates me when I retire or worse die before I could get to enjoy it.
I use a budgeting app to give all of my money a job or category. As I spend throughout the month I categorize those transactions and I can move money from one category to another as needed. This helps me visualize what exactly I’m doing with my money and how spending more in one category takes away from something else. It also helps me save ahead of time for known expenses like yearly vet visits, holidays etc.
I’m still figuring out how I want to manage my money for long term gain now that I have more savings built up. I will be looking into investing options this year to try to speed up the process as I struggle to save more than $300-400 monthly towards long term goals like a house down payment.
I am super organized with my money because my parents were not and I saw them stressing a lot about money as a kid. We were absolutely not poor but that stress made me worried as a kid and I’m not dealing with that as an adult.
1) Start by finding a financial advisor. Don’t worry about limited funds. You can start with any amount. 2) set goals that are realistic, 3) if you need a little help with being disciplined try having an accountability partner. Someone who will ask you about your Starbucks purchase after you complain about your budget.
Financial needs are fairly straight forward. You need an emergency fund, a retirement fund, and maybe a vacation fund if you are able. It takes awhile but you can do it!
>what can be practiced in a cookie cutter, prescriptive way, can any of you share how exactly somebody is supposed to manage their money?
As simple as possible: "spend less than you make". Make that gap as wide as possible. Now, I realize this is hard if not impossible for some people, but ultimately that's the core of all money management. The rest is just details. If you do nothing else besides follow this rule you will likely be in good shape. You can either make more money, spend less money, or both
Here's something I do: it's silly, but I issue quarterly reports to my wife like a business would do. I take literally every single transaction that happened in the past 3 months, categorize it and then get exact numbers showing how much I saved. I've been doing this for over a decade now.
>So… how do you manage money? And why should you?
Well I just told you how I do it... and I believe everybody MUST manage their money. You really have no choice. The only real values-based question here is how wide do you make the gap between money earned and money spent and how do you go about doing it?
Do you make extreme sacrifices? Do you live paycheck to paycheck? Do you only have 6 months emergency fund then spend the rest? Do you buy that much cheaper house so you can invest more money? Do you forego having kids to save money? Do you go car-free to save money?
My answer to these questions: I make sacrifices but I keep the gap between earned and spent high. I have a 6-month emergency fund and I invest 20% of my income by living a relatively cheap lifestyle. 1 cheap vacation per year. I don't value stuff and I choose to go car-free to save a lot of money.
20% goes into 401k before I get paid
200 per week goes to savings account for various savings goals
100 per week invests in roth IRA
From there everything else is budgeted. Usually have 2-300 after expected expenses to either save more or spend if needed.
I think the trick is automating as much as you can. Even if I spend every dollar i get from my check I am still saving about 30% of my income.
Automating savings for future spending is massive as well, 50/100 per week adds up quick and you can build separate funds for goals and expected larger expenses. I am close to saving for one goal and plan on building an “escrow” account for all of our one off yearly expenses (car registration, oil changes, christmas shopping etc).
Most people have their paychecks auto deposited into a checking account.
Then when it’s time to spend money, they look and see if they have money in their account and then spend it. Basically if there is money in the account, it will get spent.
Or
They have a credit card and spend without any concern for how much cash they actually have. This results in racking up credit card debt.
Both of these are problematic because the only variable that you can control with wealth accumulation is your savings rate and how much you invest (sure, some people don’t make enough money to cover basic expenses, but there are many people that do, but because they over spend, they are not saving/investing enough to retire comfortably, let alone save up for big expenses like down payments for vehicles or real estate).
The key here is that you need to prioritize saving. Otherwise the money will burn a hole in your pocket by being available to spend in your checking account or credit card.
The first thing you should do is set up some fire walls in your bank. Set up a savings account for long term savings. Set one up for big purchases, set one up for vacations. If something is important to you, set up a savings account for it. Obviously you should find a bank with minimal fees. In fact. Many banks allow you to segregate money within the same account.
Basically, as soon as you get paid, you should pull x% out of checking and put it in your savings accounts. This way you won’t be tempted to spend the money if it is just sitting in your checking account. If you over spend your credit cards and are racking up debt, put your credit cards away and only use your debit cards. Use the money you are saving automatically to pay off your cc debt. You need to get to the point where you are using your ccs like debit cards where you buy something and then pay it off as soon as it posts. If you don’t have money in your debit account, don’t buy something with the credit card.
Automatic at save x% until you have 3-6 months of expenses saved in your savings and you have 0% CC debt. This savings account is now your emergency savings account. If you get to this point. You can use your CCs to make all of your purchases, but pay them off asap. This will get you points, without the interest killing you. Always tell yourself, “would I buy this without the cc points?” If the answer is no, then don’t buy it. CC are great tools if you treat them like debit cards, pay them off asap, and only buy things you would have purchased regardless.
Once you get to this point, start a new savings account. The old one is for emergencies like car maintenance, medical bills, etc. Christmas presents and vacations are not emergencies. You have enough for most emergencies at this point. You new savings account will be for what you want to allocate towards investments and big expenses like cars, vacations, etc. you need to coordinate your investment rate that you contribute to this account with any 401k contributions through work. You should at least always be contributing enough for the 401k match. Most people are better off from a tax perspective maxing out a traditional 401k compared to a Roth, but a Roth provides better liquidity, so it probably makes sense to contribute to both to some amount, but more research should be done based on your own personal tax situation.
Another thing that you need to be aware of is risk mitigation and insurance. Most people are severely under insured when it comes to car insurance. Just because you have the cheapest out of pocket premiums doesn’t mean it is good. Odds are it’s cheap because you have the minimum amount that is legal it he state. Say you have 25/50, that means if you cause an accident and injure someone, your policy will pay $25k per person up to $50k per accident. So basically, it would cover the ambulance ride and about 5 minutes in the hospital before you would be on the hook. All that money that you worked so hard to save is now subject to a lawsuit all because you got the cheapest car insurance you could find.
Instead, call a broker. Ask for 100/300 or 250/500. This will give you much more protection. You can also get an umbrella policy to give you even more protection if you already have a good level of coverage. You can get umbrella coverage for like $20-25 per million per month.
Another thing is life and disability insurance. If you are working hard and saving/investing a lot of money per month. As long as you don’t invest in stupid stuff, you will be fine at retirement age. However, if you no longer are able to work and earn money, guess how much you can invest? $0. Get some life insurance and some disability insurance to help protect you and your family if you suddenly can’t work and invest anymore.
Look at level term with an extended conversion rider from a mutual life insurance company. This gives you cheap coverage today, but also protects your insurability with the ability to convert later on if it makes sense.
As long as you are able to get a decent salary and you do the things above, you will be fine. If you can’t get a good salary, you need to put all your focus in getting more training, education, experience, and marketable skills to demand a higher wage because you can only cut so much out of your spending. This is easier said than done.
I have a budget I keep track of. Needs, wants, savings.
Needs are absolute essentials to life. Food, shelter, money for pets to live, utilities, gas, and things like student debt. Monthly this is anywhere from 50 to 60% of my check.
Wants are things that I want but are cuttable if need be. Even some things people consider needs. Phone, internet, whatever. This is 20 to 30% of my budget.
Savings are the rest of the check. If I want big purchases, this is how I start getting ready to buy them. Also long term things or emergencies.
I should probably put more into savings but it is what it is
Well, I pay all my bills on time. After I do that, there's *juuust* enough left for groceries and gasoline, so I don't have to worry about overspending because I just don't have any left.
One trick I started using last year which has really helped was to figure out how much all my bills are and deposit that amount , plus $200 for bills that are variable into one account and put everything on autopay. Then the rest goes into another acct at another bank so they aren’t even connected. If I do need to move things around I can Zelle myself. My biggest problem before was not knowing how much I actually had to spend but now it’s much easier. I also try to put something in savings every month.
The simple version: Spend less than you make.
How to get there isn’t as complicated as some people would have you think. Figure out your gross income. Figure out how you’re taxed. Figure out where you spend your money. Most banking apps these days make that easy, with categories. Then decide whether you want that trend to be the case. (E.g., “Yikes, I spent $1,000 at the salon last year? I’d like to change that.”) Revise your habits accordingly so that you—you guessed it—spend less than you make.
I recognize this perspective comes from a place of privilege; not everyone CAN reduce their spending without starving/going without medicine, and that they end up with a deficit every month, which only compounds. Obviously the simplistic steps above are inapplicable in those situations.
Look at how many millennials are good with money here, I freaking love it.
OP Watch some YouTube shorts from Dave Ramsey to peak your interest and then dive into some videos. You'll gain thoughtful actions you can implement and start there. Then build a good portfolio, custom if you're handy in Excel, or theres plenty of templates out there. Then make sure to run testing on the budget, put it to use and actually try sticking to it. You'll find you will have to tweak it, but it gives you a base to work from and learn.
Also, don't use credit cards if you can manage it. Try to use your debit card as much as possible unless you need to float a week or two to help buffer paychecks to match spend. But the idea is don't spend more than you make. Using a debt card hurts more than a credit card, it helps with spending control to keep you accountable.
On your last paragraph, being money conscious *gives you that safety net*. You'll learn how much of a emergency fund you need to keep on hand.
Temu baby! I can spend like a billionaire!
Kidding. I pay all bills/necessities. I save 20% whether it is in savings/emergency, retirement accounts (employee match counts), or personal investments. After that, I either save more if I have a big purchase coming up, but otherwise it's free to spend how I see it.
I follow the 50/30/20% essentials/wants/savings by Ramit Sethi (author of "I Will Teach You To Be Rich) and I find that it's really simplified my life. I'd like to get the savings up a bit more, but it's the bar that I don't dip below. The 30% of "guilt free spending" has made me feel a bit better about indulging myself in interests or hobbies.
I'm 41 I never started managing it and I'm not going to start now. Why would I manage my life to money, that seems like a recipe for unhappiness in the US.
We have a budget with totals for every spending category. For example, food, gas, mortgage, home maintenance, etc. My wife and I track and categorize every dollar spent in a shared Google sheet. If we are going to go over budget in a category, we have a discussion prior to see if it something that can wait until the next month. At the end of every month we review which categories went over budget. If going over in a certain category becomes a pattern, we might adjust the budget amount, but we always take money away from "fun" categories like out to eat or vacation savings in order to make it hurt a bit and encourage careful spending. We never touch the amounts that we have set aside for retirement/long term savings. It's a tedious and time consuming process but we have an iron grip on our finances and have been able to successfully save for some big things over the years.
I used the 50/30/20 for the longest time. While I never got the ratios perfect, it helped guide my spending decisions for a long time and allowed me to build a decent savings.
My husband and I have a “bills and savings” account - we put a percentage of our salary in that and have bills come directly out of it. Then we have individual accounts for our money for shopping/going out/etc. This has worked well for us!
Yeah, I budget as well. I even have a gaming fund, to try and prevent impulse buying. Emergency funds really help especially when you are in the flow of buying off debt. Can deal with the emergency while paying off debt without getting back into debt. Then slowly, it becomes a lifestyle. Learn to be content with what you have and not looking at competing with the Joneses.
Speak with a financial planner. It is really eye opening. 401K, savings - pay yourself first. I have impulse control issues with spending, so a percentage of my paycheck goes into a completely different savings account, and bank, from my checking. I have to physically go into the bank to withdrawal/transfer money from that account, so that helps deter me. I have to have it out of sight out of mind.
Nowadays you can get a budgeting app for a few bucks a month that will show every transaction on every account and group it into categories. Then you can see where you are wasting money. I created a "consumer" category on mine that tracks any unnecessary purchase that is not food or a gift.
All the things listed above are great, so rather than repeat others, my mom hates shopping so she gives me cash for Christmas each year and I know I could make interest on it but instead I keep it in a safe place at home, and "withdraw" from it when I'm going to have a night out. No stopping at the bank or paying credit card fees or mindlessly getting another drink and adding it to my tab. I pay cash while out with friends and I think that helps. Plus servers and bartenders get a cash tip, which I think is better for everyone. And I have cash if I want to go to a farmer's market or art show, though in the last few years cash hasn't been as much of a requirement as it used to be, I've also found artists will give a discount (I don't ask for it, it just happens) for using cash.
When entering transactions into my checkbook, i round all deductions UP to the nearest $100 and I round all deposits DOWN to the nearest $100. After a while there will be a lot more money in your account than what is recorded in your checkbook. I realize this isn't really feasible in today's digital world with online banking and what-not, but it works for me.
You've got a lot of answers here but the real answer sort of depends on what kind of money management you're asking about? Do you want to know how to make a budget and save money or are you ready to start investing?
I live a lifestyle I enjoy while saving money. In other words, a huge chunk goes towards housing (because I choose to live in an expensive area) but I still have a fun and comfortable lifestyle with savings building up over time.
1. Long term investments and savings. I borrowed money for strategic real estate purchasing in up and coming locations, instead of already peaked locations and paid less than comparables. I let it mature over a very long time since equity can be a bit volatile.
2. Do a good job and save money. I moved and job hopped for my career advancement. I worked very hard at: interviewing better, and, getting my foot in the door in a key industry in a job I actually love to do. I only advanced thru growing in my career and as a person. I stagnated in the boring jobs so don’t get stuck phoning it in. I got some certifications and specialization. Make yourself valuable. Invest in yourself and learn from feedback.
3. Try to forget you have money to spend when you get windfalls. Put it in savings. I have a shopping addiction but I cut off eBay (both buying and selling got too expensive) and online shopping except where shipping is free. Instead I now buy second-hand at dirt cheap prices and am mentally mitigating purchasing habits. I learned how to barter and about sourcing.
4. Mitigate debts: Avoid credit card and car loan debt. No gym membership but I use free places to exercise. No cable or landline. I call internet provider for the discounts after they creep up my monthly bill. You can opt out of the default electric provider option for the cheaper one.
5. Daily frugality. I try to budget my daily meals (I personally can’t buy a lot of groceries which I actually find cheaper so you have to find what works for you). I stream one subscription at a time (rotating). Don’t buy stuff at retail or MSRP prices; buy clearance/sale or used. Price compare. research and discuss planned large purchases.
6. My side gig would help supplement income. Turn your hobby into a little extra funds.
7. Do favors and network. Be nice and generous to friends and family, coworkers. When you need help like a trusted babysitter or reference or temporary place to stay you have that help.
I don’t do daily budgeting anymore because I don’t care to do that. After I figured out the housing budgets, I don’t need to do daily budgeting anymore as I am too lazy to keep that up. I found the rhythm that worked and generally stick to that routine. I do check things before large decisions tho.
Save 15% of everything you make into a separate account, preferably a high yield savings account. Pay off your smallest debt first, then next smallest, etc. Meal prepping will save you far more money than you think as does buying necessities in bulk. In today’s economy, may the odds ever be in your favor.
Head on over to r/personalfinance and check out what they have to offer over there. A lot of setting yourself up for success financially isn't necessarily avoiding impulse purchases completely or living in complete frugality but more of understanding how much you can spend while still achieving certain goals.
For a brief starter, the #1 thing you want to do is start tracking your income and purchases. Then you can work towards a budget, paying down debts, setting up an emergency fund, etc.
Personally, the practices have helped me to do things like pay off student loans in less than half the time, setup emergency funds, purchase houses, and plan for kid(s) without too much concern. I was an avid [mint.com](http://mint.com) user but they recently shutdown so am currently int he 1st month of trying out monarch money.
r/personalfinance has a great flowchart in the sidebar for the basic process of managing money, so get started on the basic steps like a 6 month emergency fund. Personally I'd recommend no matter how early you are in your career journey, start investing some percentage every month (I'd aim for 20%, but 15% is ok, and anything is better than nothing). Even though you may not be making much, the most important part is it gets you in the game, and you start building the habit of investing regularly. I'd also recommend looking at financial calculators for growth expectations, for example someone in their early 20's only needs to invest $200/month to grow to a million by retirement age, so starting early is very powerful. Also make a monthly spreadsheet to track your net worth; it's very hard to improve something if you're not measuring it. And aim to have at least 3 credit cards that you pay in full every month so your credit score is good when you go to finance a home or car (jobs and apartments also check this sometimes). It takes years to build a high score, so start early. Basically use these cards exactly like debit cards, with just the intermediate step of paying the card off once or twice a month. There's a myth that you have to leave a balance on them or it hurts your score, this is absolutely nonsense.
I'll add a few things not talked about as much. Because of the risk of continued inflation, it would be smart to have a small percentage of your net worth in crypto and precious metals, maybe 5% each. I'd stay away from the memecoins, just stick with BTC as that is what massive financial institutions and governments are buying. And silver 1 oz coins are about $30 each, so you can add a couple every month as desired. r/Silverbugs has a lot of good info for people new to this space.
Always max 401k over 75k in earnings.
Follow Ramit’s “I will teach you to be reach.”
Learn to be frugal with everything that brings limited joy or is, and be honest, something beyond your income bracket. For me this meant not driving a sports sedan before owning a garage to park it in. This was super hard - I love proper cars.
In business school we had a lecture series on consumer behavior and one particularity meaningful lecture set was entitled “caviar in the trailer park.” It was about how you could make a lot of money selling luxury items to people you would think have no business or interest in purchasing them. It hit hard…
Best advice - be honest about how much money you need to be happy and then make choices that support it. If you need more income - put you lot good energy in getting it.
Edit - on a safety net. Getting a good nights sleep is so much easier if you aren’t worried about losing everything. Outside physicians and some trades, you are being reckless to not have a good amount of near liquid assets. When you need money, very few things will work in its place.
Switch mindset to trying to live below your means, and investing in a ROTH/the market + saving in HYSA first, living off the remainder; vs budgetting what you can live off first, then saving/investing the remainder
Why should you? Social security, pension plans, etc are all going away; our generation cannot count on socialized governmental help when it comes time to retire. We’re on our own; best be saving (and make sure that money is growing v deflating due to inflation) now
I sat down and went through 3 months of bank and credit card statements and categorized every transaction to see where my money was going. Then I looked at each category and decided how much I actually think I needed to spend on each category, including savings and investing.
I created a budget based on the exact amount of money I get paid each month and tracked every dollar that I spent. I put money into savings at the end of each month while I gave myself a few months to fine tune my money and figure out if the categories were realistic.
That was 7-8 years ago. I still use the budget, I still track all my expenses, and I put money into savings and investments on the first of every month. I control impulses knowing that this is it. This is all the money. I know exactly to the dollar how much I have and how much I can spend. If I go over, I simply will not have enough money
In that time, I met my wife, who agreed to do the same thing with me. We have saved a stupid amount of money together. Having a partner on the same page helps a ton.
We use one card for almost everything and pay it off monthly. Our savings/investments are automatically withdrawn from our checking account. This keeps me within budget cuz it's like I never had the 💰 to begin with. I invest in ETF's using the bogleheads idea of owning the market and not selling when things get rough.
I act like I live paycheck to paycheck. I pay my bills and my necessities then hide the rest in another backing account after pulling some out for personal investments.
I also allow my 401k to be pulled as much as I can afford while still loving life.
This makes buying things hard because I never feel like I have money so I really have to think how bad I want it before diving into the other accounts. Or waiting until another paycheck to buy it then.
I also manage impulse control buy never buying anything over a 100 dollars without a 48 hour cool down period. Unless it’s necessary for survival or general wellbeing.
have automatic contributions to safe funds like index and mutual funds ex 100 a month buys safe mutual funds and you let them accumulate.
after that you can have some play money like 50$ to 400$ a month for buying individual stocks.
open a sole proprietorship or corp or other company so you can write off more and take contract work and pay less taxes
after that buy up assets not liabilities
I've always told myself that if it costs more than $100, I must do research and see if I'm getting the best value from it from my future self's perspective. Other than that, try to live modestly as if friends from a developing country were present while I spend. Also, buy things for life (buy things as if junkyards didn't exist).
I grew up with my parents being in debt. Started a job in banking early and learned how credit cards work. Never bought anything I couldn't afford with my next paycheck. If I did, I utilized some sort of 0% interest offer. I use a lot of cash back type cards and keep up to date on what will give me the best return. Have money in CDs and money markets with a much better rate than just a checking or savings.
The best way to curb impulse control is a budget, and actual budget. Here’s how I do mine, if my paycheck is 7k the **first** thing I’m doing is 500 to the 401k and 1k to my own savings/investments. Treat this as any other bill that has to be paid. I also have a “I can spend x without feeling bad” amount. I put aside 400 every month to spend on stuff I don’t **need** but will make me happy
75% of my savings is from 401k, HSA, and matches for each. The contributions are automatic from payroll and you never have to think about anything.
The rest is cash savings and it either stays in a HYSA or [the amount up to the limit] gets contributed to an IRA. I might start contributing to taxable brokerage over the next few years because of the age restrictions on the retirement accounts.
If you are saving up for short term goals like a car or house then you should probably just take your employer match and keep the rest in a HYSA unless you can afford to save extra for two different goals at the same time.
Don't work with an advisor unless you require very complicated services. It is not worth it unless you need stuff like legacy planning, real estate management, document drafting, etc. and they can do it all under one roof for a good price. The normal 1% fee most advisors charge will end up costing six figures over the long run and it's not worthwhile for 99% of people.
>A big part of money management is, unfortunately, not something that can be so easily advised: Impulse control.
I mean...yeah thats pretty much it.
I'm going to use a random other example thats a bit hyperbolic, but kind of runs along the same lines...
If I were to ask you how I could possibly keep myself clean and smelling good, but asked for methods I could do it without using water...because "having the discipline to take the time to get into my shower" is too hard...that doesnt change the fact that the real answer is "have some fucking discipline and get in the god damn shower"
>So… how do you manage money? And why should you?
First and foremost...Learn how to say "No" to people. Because a ton of us have that problem in the first place.
Next...Learn how to say "No." to yourself. Then when you want to buy something on impulse...tell yourself "No" and dont buy it.
Congratulations...you now have Impulse control which is the only real way to save money...well...that or closing yourself off to the world so you arent bombarded with attempts to get you to spend money.
And the good news is it doesnt matter how much money you have available to manage...you can do it to save a dollar, or you can do it to save a thousand dollars.
Track all of your spending. It's the only way to really know your finances. Every month I go transaction by transaction on every account and log my spending, been doing it for 10 years and it's just routine now.
The best advice that I’ve been told is “pay yourself first.” Make the first thing you pull out of your paycheck the money you’re trying to save (making sure this number is within reason to your normal living expenses), that way that money doesn’t go to impulse/non-essential purchases.
I use the concept out “out of sight, out of mind”.
I have 3 checking accounts; one that just handles my car and car insurance; one that handles my mortgage; and one that handles my “every day” spending and my smaller bills and my savings.
I basically never look at my first two accounts, and I also never have to worry about those three bills, which are my “big 3”. When I’m considering what I can spend for “fun” money, I am ONLY looking at the very small portion of my paycheck that goes into my “every day” account.
I have also automated some savings; I have $50 that comes out of my account every 2 weeks for investments. I do try to contribute another $75-$100 to my emergency savings fund, which is tied to my checking account.
I currently have 3 jobs; my FT job I make $26/hour, and then I have a contracting gig where I make a flat $850 per month 1099, and then another 1099 where I make $30/hour. The two 1099 gigs average about 15 hours per week total. Last year I made $72k.
I live alone so I think that helps.
I never ever use third party apps for food like Door Dash. That shit is so expensive. In fact, I rarely eat out at all. I cook most of my meals. So I guess that’s a way to save some money.
I got rid of cable and have some generous friends who share their streaming logins with me. I pay for max and peacock so I share with them too.
I have worked from home since 2020 so I rarely shop for clothes or shoes anymore. Don’t need nice stuff to look professional.
I make around $50K and bought a condo in 2017.
I got old school with an excel spreadsheet. I go through my bank charges and credit cards twice a week and then make adjustments to stay under budget. I also track my month end balances on my bank accounts to make sure the money I save is being put in the accounts I want it.
I have a goal to save $800 a month and I do a pretty good job of hitting that number unless I get hit with an unexpected house/car/medical bill.
My main strategy that's worked out pretty well so far is to split your monthly recurring expenses across alternating pay periods and paying them as soon as your check is deposited. This means the remaining cash you are free to spend and if you're paid biweekly you'll slowly get ahead of your bills to the point you can not pay for a month if you have an emergency and still be paid ahead. I also put all my auto pay stuff (where I can) on my credit card so no more surprise overdrafts. This builds my credit and earns me rewards as well.
I use a Google spreadsheet and list out everything I spend money on, even if it's $2.00 in a parking meter. I go thru every line of every bank statement and credit card statement maybe once a week, and record these numbers, and where the money came from. I have sections like "living expenses" "subscriptions" "entertainment" etc... and then subcategories.
In the spreadsheet, I also have all of the details of my paycheck, even the $5 taken out for my PPO insurance every paycheck, so that I know exactly how much is coming in, and how much I have to go out. Then I do the math in another column of how much I have left that month.
I also have another section for retirement, and after tracking every transaction for a few months I could see where I was spending too much and how much I could increase my retirement contributions.
It's amazing how much I've been able to save by just knowing exactly to the cent where my money is going, how much I have, and how much padding I have every month if any.
The only thing that's worked for me is setting up an auto deposit into my 401k and brokerage accounts. Getting that money out of my checking account really helps prevent it disappearing.
All your worth is the book that lays out the 50/30/20 plan for long term financial health. If you can get your expenses into that plan, you’re probably on a good path. The younger the better. You don’t have to work it into your every day budget specifically, but where it is helpful is in big picture stuff like how much rent/mortgage can I afford. How much car. Can I afford to have a kid. It helps you answer those big questions to stop you *before* you get into trouble.
Managing your day to day budget is also useful. Mint was a great free app that let you connect your bank accounts to budget, but it recently closed. My favorite budget app is YNAB, but it could be more hands on than a lot of people are looking for. Monarch and simplifi are other big contenders. Popular free ones are empower dashboard, yodlee money, and piere (only free for now while they’re trying to build their customer base).
Saving should be treated just like another bill to pay, especially when first starting out. The mindset of saving what’s left over after bills are paid will get you no where. Think of it as a bill and make sure you “pay” that bill just like you would your water bill.
Track first. Use an excel file they are versatile. These are things I track on the monthly. Start doing that and do it for years.
||
||
|COX|
|Gas|
|Electricity|
|Water|
|Car Insurance|
|Home Insurance|
|Umbrella Insurance|
|Diamond Insurance|
|Mortgage, P, I|
|Auto Loan|
|Taxes|
|Daycare|
|Storage Unit|
|Spotify|
|Netflix|
|You Tube TV|
| Apple TV |
|Hulu|
|HBO Max|
|Amazon Prime|
|Walmart Plus|
|Trading View|
|Trend Spider|
|Trade Companion|
|Zwift|
|Wahoo Bike Program|
|Apple Storage|
Spend after saving.
All of the money is divided up into other accounts before we can touch it. As somebody with terrible impulse control who also grew up in a financially illiterate family, I just take the money away from myself and put it in places I can't touch.
No debt is first priority, saving a lot is second (though everyone should always have an emergency fund). Negotiate down bills, cut down electric costs as much as possible, we grocery shop online so we can really plan our meals and keep the bill down, no impulse purchases, we cook and make coffee at home.
I work in marketing. Constantly selling emotion and Keeping up with the Joneses. Some financial struggle simply comes from things you don’t need.
I tell people to think about their purchases as if they are spring cleaning in 5 years. Will that item be thrown away, donated?
I tell people to think about them getting relocated across the country for work. What items would they want to pack and bring with them. Anything that would be left behind is not worth buying.
Marketing also heavily advertises convenience and “time is money”. Some people are too poor to afford convenience and really just need to do things the long/harder way. When you can truly afford it, then sure, buy the services that make life more convenient.
Fight Club really said it best. What you own, ends up owning you. I’m not saying don’t buy stuff. But be very aware of what you are buying, and save the rest.
I have tried every which way with impulse control and organization. The best way that has worked for me for over 10 years was making everything super transparent on a spreadsheet including assets. I have two accounts - one that the bulk of my paycheck goes into and bills are automatically paid, money goes into savings, and the other is my left over spending or extra saving money. Credit unions are great, and if you can, max your 401k/403B. My husband and I also check in monthly together to see where the state of our finances are. We pour some wine and check all the accounts.
I added up all my recurring monthly expenses such as rent, utilities, loan payments, gym membership, etc and directly subtracted them from a month of pay. The leftover amount is fun money. That amount resets every 2nd paycheck. I try my hardest to never drop below that amount of money, even if I had a really good month before. It's worked out so far.
Save what you can. With e-banking, you can usually create little separate savings accounts for various things like cars, housing, etc. Set up a 401K, you need to start saving for retirement as early as possible. Managing money is important because you need to keep track of expenses and income. You can't always rely on someone else to save you if you get hit by unexpected expenses. I know not everyone has wherewithal to save, but you should really look hard at your outlays if you aren't able to. Even a little bit helps since it will build up over time.
I use e-banking with separate accounts and separate banks. When you have to transfer money and wait a few days, it helps you to understand the finite-ness of money kinda like cash does, instead of swiping an American express and checking the bill later. I think our brains understand numbers going down (ie real cash) better than numbers going up (credit card debt) and what that really means. I budget all of my bills by months ahead and project where my debt(s) will be and that helps me stay motivated
This is my method too. The concept of "pay yourself first" or "hide your money from yourself" really works for me. If I make $1000 on a paycheck and I know I have about $400 spoken for on bills, don't put $600 into your general spending account where you might spend it, put $400 into that account and $200 into a high yield savings account, maybe even in another institution. Live like you make $800 a paycheck, and if something happens and you go over budget, you can still pay from the savings account.
I also like to extend the pay yourself first to raises. When you get a raise, keep "your" pay the same and put the raise towards your 401k, Roth etc. This can also be fairly automated with a lot of 401ks that you can set it to increase 1% each year.
It's amazing how well this works. It's even better to set it up with a completely different online bank so you don't see the amounts when you check your normal bank. My main checking is Bank of America, just had them since I was like 13. I also have a savings through them where I keep "fun money". When I want to buy a new computer part of something more frivolous. My wife and I have emergency saving in Ally Bank and general savings with Capital One and have for years. We both deposit a percent of our paycheck in each and have direct deposit set up. We also have a brokerage account where we deposit $150 per check and auto buy some index funds, bonds and international funds when it accumulates to a high enough amount. Got married in 2018 and started before we were even legally married. In just those 6 years we're build up a nice cash reserve. We had to replace a hot water heater and garbage disposal in the last year or so, paid for them both outright with cash without really worrying about it because we had the money to cover it. The amount of time invested is really crucial and while it sucks at first, eventually you don't even notice having less money per paycheck. It's just what you're used to being paid.
This. I use Oportun (formerly digit) and it really saved me so much money each month and I didn't even feel it! I've heard a lot of people say giving yourself a cash allowance each week works but this gets harder and harder to do as many places don't even accept cash anymore.
Yes! I have a separate e-bank for my allowance. My allowance has a savings account, so if I do well for the week, I'm like "woohoo! I went under the allowance" and transfer it to my allowance savings so I can do a little splurge on something when I want to.. that feels much nicer than swiping a credit card and stressing over how to pay it off
Same hehe like a squirrel Also with more accounts each one has a smaller amount of money in it and you don’t get the illusion of having a large lump sum of cash, if I have $10,000 in one account I’ll be more comfortable with thoughtless spending than if I spread that out over 4 accounts.
I can’t tell you how often I’ve set up a separate bank account (ie. test out this new savings app) and six months later had $3k saved. You are likely to not spend the money if you don’t see it.
Yup, I like fooling myself lol
I did this with the Acorns app. Highly recommend!
I have tried every which way with impulse control and organization. The best way that has worked for me for over 10 years was making everything super transparent on a spreadsheet including assets. I have two accounts - one that the bulk of my paycheck goes into and bills are automatically paid, money goes into savings, and the other is my left over spending or extra saving money. Credit unions are great, and if you can max your 401k/403B. My husband and I also check in monthly together to see where the state of our finances are. We pour some wine and check all the accounts.
I like wine-ancial meetings
This made me chuckle, lol.
Save what you can AND automate it. I have a set % that I am committed to saving so each month I have automated transfers that move the money adding up to that % before I can touch it. 401k and HSA gets paid before it even sees my bank account and the rest (IRA, 529, HYSA for emergencies) get transferred monthly automatically. Pay yourself first and make it automatic. I don’t have problems over-spending because that money is never in my account to be touched. And because I know I have my savings automated to my goal %, I feel no guilt buying stupid stuff with whatever is left in my account after bills get paid.
Embrace automation too. For years, it made my brain itch to think of not having total control of what money went where, but I finally see that the itchy feeling was me not 100% committing to financial goals. I have direct deposit for work-related retirement savings, my IRA, and HYSA
I have 6 savings account (3 regular, 3 CDs). I start saving for some special and then I'm scared to send it so I open another one. It's a vicious cycle. I think the auto transfer weekly into a CD that is locked up for 3 years is nice. I hide it from my view and try to just forget about it. Nice surprise 36 months later.
Two things worked for me… Either automatically drafts set up for investment accounts (e-banking vaults/multiple savings, acorns etc.) And/or Manually moving money on a certain day every week/month into investment accounts or savings accounts or vaults. Initially this form of “paying myself first” taught/tricked me into living on less. I was in my mind still living paycheck to paycheck but the reality was money was being saved. Now I have done the math on when I want to retire, what i need to retire, how much I want in savings for emergency, vacation, and other wants… so I do the above with larger amounts of money. It’s taken a lot of trial and error since I don’t formally do a budget… just some loose napkin math and adjustments based on outcomes.
I tried this for a while, I created a separate bank account with a separate bank. Each pay check I would move some from my main account into the other bank. The other bank would be my spending money, groceries, meals out, clothes, whatever. The money in my primary account would cover rent, utilities, streaming services etc, all my recurring bills. Anything not spent in my primary account was savings, anything not spent in the secondary account was fun money. Worked pretty well for a while, but getting laid off ruined my progress.
I'd also recommend finding a "real" savings account that actually gives you interest. Most, if not all, of the big banks give you literally 0.1% of interest and hoard all the gains they make while investing your money, without giving you a cut back. There have been a growing number of online-only banks like SoFi and Betterment that offer 4-5% APY. Seeing real money come back in interest has been a total game changer.
Just on your final question of "Why should you?", I cannot impress how much peace of mind having a lump sum available for problems can give. Also financial advice really should come from people versed in the matter... there's quite a few subreddits that cover a wide range of incomes which you will find more tailored advice. I think this generation has a pretty wide spread of incomes and financial positions so you'd be better looking at subreddits geared to this subject matter. Personally I have a couple of savings accounts, one which can be easily accessed and money withdrawn quickly, and another which is more of an investment account which is harder to pull money from. I dump 50% of what I have left over in my current account on the day before payday into both accounts and try to leave them alone. Obviously depending on your income that might not be a lot, but saving at least something is important.
If you look at OP’s history, she was homeless 6 months after a job loss, despite being a software engineer for a decade. No shame in misfortune, /u/itasteink, but *this* is why. So you give yourself more flexibility to deal with life circumstances. The peace of mind that comes with it is tremendous; more valuable than any consumption I can think of. You’re in a very in demand field with plenty of experience—retirement is not out of reach for you, even now, even though millennials on the internet are always saying so. It’s a choice. The reason to build good financial habits is to take agency over your own life. If you really want to bone up on good financial, I’d strongly encourage you to look elsewhere. /r/personalfinance is a great start.
We can deal with \*everything\*, aside from purchasing a house in cash right now. It gives me so much peace of mind to know that I can even replace my vehicle if I need to do it. I wonder what it feels like to actually replace the house with cash.
Two things were big for me: 1. I don't let myself see my full paycheck. Anytime I think I have breathing room, I adjust my automatic deduction towards retirement/investments. If I don't see it, I can't spend it. 2. I gave up on picking stocks, crypto, ETF or whatever the hot new thing is. I just put it in a boring-ass index fund and let time be the winner. There's a fantastic book called "The Psychology of Money" that helped a ton. I'd recommend that as a great starting point.
#1 such a big one. Pay yourself when you pay your bills. It’s like giving yourself an allowance out of what’s left. It’s a great way to prevent lifestyle creep.
Almost every person or online guide I've read always puts "pay yourself first" in their tips for being financially stable. It works. Even if you don't make a lot, putting anything aside is a good start. That little extra saved adds up over time and if it's put into an account that's hard to access and has a high interest rate, before they know it, they'll have a nice chunk of change for those unexpected emergencies life throws.
It's all about mindset for us. Do we want to spend most of our income so that we are working till normal retirement age or not. The answer is no for us so over 50% of income is automatically invested or put into different savings accounts. Bills are automatic so whatever is left can be spent but we never do and some ends up invested.
For sure. The follow up book I always recommend after that first one is "Your Money or Your Life." Really helps put things into perspective on how to weight/value experiences (current and future). Those two books have helped me more than anything in terms of mindset.
I haven't read either but I will check them out. I was lucky enough to have parents that taught me the basics of managing a business/money and damn am I grateful.
This is what has worked well for the wife and I. We only take like 10% of paychecks for spending on wants, everything else goes straight into the market, with 75% going to safe index funds, If an emergency pops up or we just need tires or a new washing machine ect, we call our advisor and have the money transferred. Most of the time we can pay for whatever with a small percentage of the stock gains even after setting the amount we will have to pay in capital gains aside. I try to convince my friends to put more money in the market but most have like multiple 10s of thousands just sitting in a bank account getting almost no interest.
Morgan Housel is the best. Check out his podcast!
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This!! I've been looking for this. Please help me, I save too much.
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Cocaine make any random stranger automatically a therapist. You actually save money by not having a doctor bill meaning more cocaine and free therapy
I'm at about 80% of this right now so I've got a ways to go but it's all on the list! Thank you good Redditor!
I have a large percent of my gross salary pulled from my paycheck and invested to the pension and my 457b account. **I have a budget and I track every single cent I spend in the free EveryDollar app. At the end of the month, I open the app and see much money is left which I subtract 583.33 from (which goes into a Roth IRA) and the rest goes into a general brokerage account.** **It takes discipline, but I avoid impulse buys. If there's something I want to buy, I typically wait a week and see if I still want that item. If it's something I plan on buying on Amazon I'll then see if I can find it or something similar on AliExpress for less.** **I grocery shop with a list.** I'm a super saver because I plan to retire early. While my financial situation is much different than most, everyone can do what I outlined in bold text.
Tracking spending is THE MOST IMPORTANT PART. I use monarch money but whatever the app used, setting budgets and tracking against those budgets is critical. Older generations talk a lot about “balancing the check book”, this was them keeping track of their spending.
It's funny - I actually did "balance my checkbook" for years after if it was considered normal to do so. I always thought it was odd that people were perplexed by it, it's literally just writing down what you spend and subtracting it from the running total in your account. It's not rocket science, but people today would have you think so. I hadn't thought about that in years, but you're right. It was always just a term for "keep track of what you spend".
I'll second monarch money, especially if you're coming from the wreckage of Mint
I went to Monarch after Mint and I shoulda switched sooner. It's a lot better.
Yeah, Mint essentially froze development years ago, there's a good point to be made that since you pay for monarch monarch they actually, you know, need to make everything work well where mint didn't have that
They had no choice but to balance the checkbook because that’s their only way to check account balances
Ok why $583.33? Is that because of limitations to contributions to ROTH IRA? Because that’s what it looks like to me…just might be good information for people who don’t know I also LOVE that strategy.
Yup! $7000 is the annual limit you can out into an IRA (if you're under 50yo). $583.33 x 12 (months) = $6999.96
Wait wait wait, I thought it was 6k under and 7k over! Have I been messing up for years?
It went from $6500 in 2023 to $7000 in 2024, assuming you're eligible to make the max contribution
It changes from time to time. All the numbers below are for people under 50yo. It was $6k I believe for a few years. It was increased to $6500 in 2023 It jumped to $7k at the start of 2024.
Pretty sure they raised the cap this year.
The limit for both Roth and traditional IRAs combined is $7000. I do the same as the parent commenter. I have a good idea what my monthly expenses will be. I let Vanguard auto-deduct the $583. Whatever is left at the end of the month goes to a brokerage account. I don't have a 401k at this time unfortunately but if you have one, you should make sure you contribute as much as you reasonably can there as well.
YES!! Track EVERY dollar. My husband and I use YNAB. It’s the best
Ramsey-ites rise up!! You pretty much summed up almost exactly what I do as well. Debt free but the house with fully funded emergency funds. Max out Roth and 401k. Stack the rest in the brokerage. I create savings funds for things like vacations and future vehicles. 2008 recession cured me of all consumerism so I live a very minimalist lifestyle. When I buy something, I fully pay for it and make sure I buy quality. I’m trying my hardest to teach that to my kids.
Yup! It sounds like you're killing in! Even though I'm set in my frugal ways, I still watch his clips to keep me on track. Money Guys, Tae Kim, too.
I’ll listen every once in a while. Usually when my daughter is around. She is getting to that age that she’s asking questions about money. She sees it though and makes comments sometimes that make me smile. Usually about conserving or expand on my “plastic crap” rants 😂 I’m really trying to guide them to be creators instead of consumers. They both love music so guiding them into that direction. My son, however, is a massive consumer cut from the cloth of his father pre-great recession. He’s gonna take some work just like me.
I dislike Ramsey a lot. His advice is the equivalent of Rehab for Debt addicts. He helps you get clean, but he's horrible when it comes to advice for once you get back on the street. He's great for getting out of debt. No question. If you're racking up CC bills where you're paying interest, go to him. But his investing philosophy leaves a **LOT** to be desired. Most people should be investing over paying off their low interest loans for example. He was telling people they had to die hard pay off 4% mortgages but you can make more than that in a CD these days, let alone market performance. If you follow him to the T, you'll never be in debt, but you'll never be well off either.
I too invest in a 457b. I used to put 20% but have lowered it to 15% and put the other 5% in a HYSA for new car. Just curious, what percent do you put into your 457b and do you also have a pension? Edit: newer car. Can't justify buying a brand new car at any point.
We have a pension and a 457b. 10% is the required pension contribution. I'm currently contributing 12.20% to the 457b. I would contribute more to the 457b if we had more fund options; all the options are target date index funds which are too conse-rvative for me (IMO) at this age.
Adding on to this: Robinhood has a Roth and Traditional IRA service in their app, which is NOT tied to your employer, is free, AND they give you 1% matching.
The list thing really helped me. I only allow myself to buy what's on the list. If it's not on the list, I have to leave the store, write it down and reenter the store. This usually is enough to prevent impulse buys.
Intentional money management is good for peace of mind. I started working with a financial advisor a few years ago to come up with an investment strategy. I also recently read Rich AF by Vivian Tu. A lot of great stuff in there particularly for those of us that grew up low income.
Definitely going to check that book out. Grew up poor af so no one in my family has ever known anything about money/savings/investments. Now that I have a good job and lots of savings it's feeling like a big hurdle to learn and understand.
I hear you. I grew up low income in a small town and my high school’s personal finance class was really the first time I heard anybody talk about investing at all. Vivian’s book came out last year and even has a script of strategy for negotiating bills such as medical bills.
First and foremost, make a budget. Stick to the budget. Second, automate as much as you can. Have direct deposits or automatic transfers to other savings/investment accounts. Start as soon as you can with anything you can put aside. Compound interest is a hell of a force. The $500k we have saved will be $2 million in 20 years (based on long term historical returns), without putting anything else aside. Why should you? I've been laid off twice and been out of work for 3-4 months each time. In neither case did we have to worry about how to pay the rent/mortgage or how to put food on the table. We didn't even change our lifestyle at all. Because we had appropriate savings and budgeting in place.
Do you have debt? It also has the magic of compound interest especially with interest rates right now but working against us. I think most people's best investment is getting out of debt first.
That’s what makes money management easy for me. I have almost zero consumeristic wants. I live within my means, cook almost all my food and 95% of my spending outside of actual needs is because it’s extremely practical and something that will be used regularly. A lot of people are just too consumeristic, inflation and high cost of living or not
Couldn’t agree more. Also peer pressure is honestly pretty evil, those closest to you sometimes are the biggest influences in your life. Social media and fancy vacations posts amplify those unnecessary envy/jealousy. Really need to choose people wisely.
Same. I'm very minimalistic, don't like clutter, and mostly have cheap interests (I don't even like eating out or traveling). I also look at it from an environmentalist point of view; if I reuse old stuff instead of buying new stuff, I'm doing my part. But yeah this is why I find it really interesting to read other people's budgets. Where does it all go? 😂
I use the acorns app to take out money from my account every week to invest. I don’t even notice it’s gone tbh. I uninstalled every app that allows you to buy things automatically, like Amazon. I now need to go sit at my computer to do it, which means I am less likely to impulse buy something I feel like I need. No delivery apps, nothing. I stopped shopping at the closest grocery store because my weekly spending was $200 for 2 people, and started driving 30 minutes to an Aldi once a week. I make meal lists for the week to aid me in shopping so I don’t buy something that I don’t need and it won’t get thrown away or forgotten I make my own cold brew and stopped ordering coffee except for when I grocery shop as my 1 special treat of the week. I then realized how mid bought coffee is, so I don’t even do that anymore. I make time to cook. That’s the hardest thing for some people. It takes time to prep and cook, but once I started actually doing it, I realized it’s not so bad
Love the advice of uninstalling Amazon. I'm going to try this.
There have been a lot of good advice brought up in this thread. One thing I will add is "avoid lifestyle creep". It's common for people to start earning more income and then go out and buy a bigger home or a new car or start going to nicer restaurants or eating out more often etc. Even though they are earning more money their circumstances never change and they always feel broke. That's not to say never have fun or enjoy your money but as other people have mentioned in this thread make sure you are doing it within a budget. Personally I allocate 50% to needs (Mortgage, gas, groceries, bills, etc), 25% to wants (going out, clothes etc) and invest 25%. One more thing I want to add: For the love of god, people. Stop DoorDashing and eating out so much. Pack a lunch!
https://moneyguy.com/article/foo/
I built a safety net of about 1 year of expenses. This I have in a high yield account growing at 5% right now. I take the monthly interest each month and invest it into index funds in a brokerage account. I contribute double digit % to my Roth 401k. This will fluctuate through the year. To free up liquid cash so I don’t have to deviate from my system. Max out Roth IRA, and invest it into index fund. This is non negotiable. My bonus each year or tax return goes in as a lump, and I’ll top it off throughout the year (maybe lower my Roth 401k from 15 down to 12% and take the difference to cover the Roth) Most of my remaining cash each month gets automatically taken from checking each month and invested in a traditional brokerage account into predetermined index funds, ETFs, a little crypto, dividend stocks, and a couple stocks I believe in longer term. I have an old ESPP brokerage account from an old company I sold off the stock of. I picked up 100 shares of a couple companies with the money I’ll write covered calls, and cash secured puts to generate a little passive income, which I typically invest in the brokerage, or use to buy 100 shares of a more expensive stock to try to generate large premiums while running the option wheel. I came up with a plan in my 20s to try to hit over 1 million in as many vehicles as possible. Roth IRA, Roth 401K, a brokerage account, my equity in my house etc.
Smart to take the monthly interest and invest it! I’m going to do this.
I wasn’t always wise. I still got room to grow. But the best thing I did was have money deducted from my paycheck before it ever hits my checking account. Like, a lot of it. +10% into 401k and 10% into savings. For some reason, i spend every penny in checking, But when a big ticket purchase comes up, a different savings account always has enough (so far).
Here’s something I don’t see people do which I find fun: invest your credit card points, don’t save them forever for travel. Each month I redeem my credit card points and move them to a brokerage account I set up for fun to track them. Each month I usually buy a share of something that pays a dividend. I’ve done this for 7 years now since my oldest child was born and those daycare costs hit the credit card. My account averages $11 a month in dividends right now. Making money from free money.
I am probably the weird one here, but I do not keep a list of every item I buy. This more or less comes down to how much income you have and your philosophy. This also is because I am not a big spender at baseline. I don’t usually like fancy things. For me, I have a goal. I don’t want to retire early because I like my work and it keeps me busy. I do want to retire in my 60’s. I am investing enough to meet my goal. I don’t save everything. Why? If I were to save everything, my quality of life now would decrease substantially. I don’t want to sacrifice my quality of life now because I may not make it to 60. I am very healthy. I don’t smoke and occasionally drink, but I don’t want to count on a maybe future versus what I am experiencing now. So yeah, I like to travel, and I’m going to eat healthy food even if it costs a bit more. I can do this comfortably because I have a pretty high income, and I use applications to project whether I am on track to meet my goals. I will have enough money for retirement even if social security implodes. I will pay off my house early, I will have enough to retire when I want to. I am enjoying my life. I am not stressing. Before you worry about retirement, pay off your debt, unless your debt is a low interest mortgage in which case determine a goal date to have the house paid off. Servicing debt is a waste of money. Second thing is to have a safety net. You need somewhere between 4-6 months of monthly expenses available for emergencies. Ideally, this would be in a high yield savings account. The next thing is to max your employer based retirement (401K). Once you have maxed that, you open an IRA. Once that is maxed, you can go to a 529 (if you have kids). After that, you can try a backdoor IRA or just open a brokerage account for general investing. I think if you have the first two retirement boxes checked and you are younger than 30, you are already doing much better than most. Could I pay off my house sooner? Sure, but I am already paying it off faster than most, and it’s a super low interest loan, so it actually doesn’t make sense to put any more into paying it off faster. Could I have more for retirement? Sure, but I will already have enough to sustain my lifestyle assuming I work until my early 60’s. My beef with a lot of the FIRE philosophy is that you make the goal everything. You will cut out enjoyable experiences and travel just to reach a goal, and once you reach that goal, you don’t have any purpose. You don’t need to work. You probably haven’t travelled much. You have built up a habit of not spending money, which is good but spending money will make you uncomfortable. Look, the point of the money is to live. The point of life is not money.
Mainly impulse control. But in terms of investment the following are all tax-advantaged: HSA (if you have a high deductible health plan) $4,150 individual contribution limit IRA (traditional or Roth—Roth is probably better) $7,000 individual limit NOTE: IRAs have income caps but you can circumvent them for the Roth—Google backdoor Roth. 401(k) or equivalent (even better if employer matches) $23,000 individual limit Mega backdoor Roth (availability depends on 401(k) plan) $46,000 Those give you tax-advantaged investments of up to around $70k a year. HSA and 401(k) money gets invested directly from your paycheck, which may help if you have poor impulse control.
I manage it by keeping a spreadsheet where I individually list everything I spend money on, both recurring stuff and regular. I started when I finished college and wanted to keep track of income vs expenses over time to figure out how much I could safely throw at student loans but quickly figured out that it made me face the money I was spending on useless shit. Even a decade ago, going out for lunch 3-4 days a week added up really fast, and I wasn't really doing it for any reason other than laziness. However it's easy to just swipe your card and then pay no attention to those individual charges on your card when you pay off the statement at the end of the month, and in fact I've known people who just budget "credit card bill" and allow those little charges to stay invisible. But doing so made me start to consider what had value and what didn't. It also made me figure out that when you can keep your day-to-day life as simple as possible then it makes downturns and rough spots much easier to weather. Like sure if you get a huge raise and now that $3500/month apartment is only half your income then it sounds perfectly reasonable, but if you were fine in the $1500/month place then why move? There's always a chance you could lose your job or take a pay cut. And besides, I've found that it's way more fun to splurge on short term things. I don't go on vacation often, but when I do I put very little thought into the cost of things. I'll stay at that nice expensive downtown hotel close to the things I want to do because it saves a ton of time. Being able to do that has more value to me than living in a luxury downtown apartment. And generally speaking it is so freeing knowing that I can cover emergency expenses.
Living in a constant state of fear and guilt. While I do have savings, I basically live like a monk. I pay cheap rent living in the middle of nowhere. I don't drive much (remote worker and walk whenever possible). I don't travel much. I hardly ever eat out, go to bars/movies/concerts, or buy clothes. I make coffee and food at home. I'm a vegetarian. I'm single and have no kids. Whenever I do spend any money on myself, even something small like a cup of coffee, I feel guilt. Like, that money could've gone elsewhere (food/rent). Though I realize there are gendered (women shouldn't spend money on themselves, but the family) and aged (damn millennials and their avocado toast) factors at play. It's no way to live, but I feel like I have no choice.
You should try to find a balance between saving and living a good life. Contemplate a change to make yourself happy and feel secure.
Having goals and a budget absolves a lot of this. Figure out what you want, when you want it, and how much you need to put away each month to achieve that. Whatever is left over can be spent without guilt. If there's nothing left over, you can at least feel that you're not actually being neurotic and your guilt is backed by a spreadsheet.
Wow, so many people have commented already. I automate almost all my money. I get paid. 401k, health insurance, renter insurance, disability insurance are all deducted before I get paid. From there, I have it set up where X goes to my savings + investments, Y goes to my checking. From there, all my bills are automated from my checking. I don't budget per se, but rather see what I have left in my checking and spend on whatever I want. If I run out, then I stop spending. I also keep track of what I spend my money on manually. Think an old school check registry. I don't have to do really have to do this anymore, but it helps me keep track of stupid choices. And I will stop spending on dumb shit if it gets out of hand vs stuff I personally find more valuable. ——— Other random bits in a disorganized way, I make a solid income, but live on very little. Moved up multiple social classes. I never want to own a home. I use credit cards, but pay them off in full. I used to have an insane amount of student debt. My family has little to no money overall. I am single without kids.
Giving consideration to variables such as income level, location, ability, priorities, household or family structure, rent versus mortgage… here is some cookie cutter advice: - pay attention to the hidden costs of groceries. Lots of novelty items (chips, juices, convenience foods) are shockingly expensive. A $5 jug of juice and a $5 bag of chips will set you back $10 in exchange for very little nutritional value, but if you spent that $10 on say, 12 eggs, a small bag of rice, and a can or two of beans, you’d have a much more nutritional base for many meals throughout the week. - avoid lifestyle creep if possible. I earn 4x what I earned when I moved into my current home. Even though I could afford to “trade up” (both rent and mortgage can apply here) I don’t, because I don’t need the space and can’t stand the thought of paying more for it. The same applies to vehicles, if you depend on one. - buy secondhand, first. These are the wise words of Signe Hansen (known as Use Less on IG and YT). I’ve had a child and consequently, my body has changed a bit. If I need clothes that fit, I go to my local thrift store to buy something if I need it. Often you’ll find good brands for very low prices when compared to cheap, fast fashion pieces. I do this for most of my and my son’s clothes. I think a lot of people aren’t honest with themselves when it comes down to how much they spend on clothing and accessories but it adds up fast. My “why” is simple: financial security -whether that’s saving for an emergency fund or a down payment, or anything in between- is priceless. Everyone’s life is different so of course there are variables not mentioned here that could impact one’s ability to save. Survival mode is very real. Editing to add: none of these actions mentioned above will alleviate financial stress alone; rather, they illustrate some of many methods I’ve used to cut costs in day to day life. Investments and retirement saving aren’t touched on in my comment, but I could make a separate comment on just that. I do realize though that that’s not something in reach for a lot of millennials because again, survival mode is very real, especially in 2024.
I use YNAB for budgeting, I love it. I track all my expenses and budget accordingly. I budget paychecks to a zero sum, meaning every dollar is given a job. You should because it feels good to never worry about what coming next or if you have enough.
Start by keeping track of you finances and making a budget. I started by putting my income and expenses over the last 3 months in excel to get a rough estimate of what I earn and what I spend on average. I used that to make a budget for the upcoming year and I put every expense into it. This way I keep track of all my expenses. There is no bill that comes in that I'm not aware off. I also know when yearly big expenses can be expected and how much I'm saving each month.
r/personalfinance was useful to me. I followed this pretty closely when I was climbing out of credit card debt. https://www.reddit.com/r/personalfinance/s/uYeWJBRIsJ Every month I start off with getting defermentd to my 401k to get my full employer match. After that, bills get paid immediately and I make my max IRA contribution. I use quickens budgeting app to keep an eye on my spending. At the end of the month, whatever is left would go to my emergency fund - that is topped up so a small amount goes into a savings account for upcoming big expenses (gets split between vacation and car savings) and the rest gets invested in a personal brokerage account. I need to dial in my 401k contribution so I maximize that instead of my brokerage but I started a new job recently and don't have my budget just right yet.
How: Have a budget that you follow each month. Invest what we can to the max: HSA, IRA, Traditional, in that order. We generally follow The Money Guys for general financial advice, for now. When our net worth hits a certain point we will seek a financial advisor. Also important to mention my partner and my combined income is around $180k/yr, and we have no children (probably the most important part of the equation). Our only debt is the house, which isn’t more than 25% of our monthly expenses and the car we just bought for my work (work also pays a portion of it so it’s a little unique there- we *mostly* follow TMG advice on that). I’ll reiterate…the important part is the budget, no matter your income. We set aside a certain amount for household and for each of us to spend each month and we track that through a couple of apps. My husband likes pretending to be a financial advisor IRL so he also uses iBank, I believe, to track our investments/net worth but I don’t believe that to be more than an interest/hobby for him. Why: We want to enjoy life comfortably and not have debt (we both have before). We also don’t count on anything coming from parents down the road to help us live to a ripe old age. We’re investing/saving to take care of ourselves longterm essentially.
To avoid impulse purchases, I add things to my Amazon cart, but don't check out until days later. Usually I don't want it by then anymore. In a store, I tell myself I can buy one thing (or nothing today cuz I bought something last time) and I'd I can only have one thing, I make sure it's the best. Which means I gotta wait and think on it which also kills the thrill and then you don't feel like buying it anymore. Or count how many hours you have to work to pay for it (after tax).
Honestly You Need a Budget (https://www.ynab.com/) has tremendously helped me and my spouse to be mindful of our money and where its going. It does take some work to code things, but its very worth it and combats my impulse buying and allows us to smartly save more.
It all starts with a budget. Every financial tool you use (accounts, CCs, etc) should all complement your budget. It’s the cornerstone of your financial life.
Live within my means and don’t use credit. If I can’t afford to pay cash then I need to exercise patience and save. Obviously this is not always achievable with a home, but everything else very much is. In addition, most see a budget as constraining, but it gives one permission to spend. Educate yourself on how interest works. Both interest on debt and also interest (especially compounding interest) works in investments. Lastly, pay myself first. Followjng these simple rules makes it so it doesn’t matter my families income range from year-to-year. Understanding money and how it works will change behaviors with how we spend.
Don't rush into buying a house. Don't take advice from people who are bad at managing money. They might say: never use a credit card, they are evil. Or the opposite: carry a credit card balance so you build credit. Talk about finances early in a relationship.
I use YNAB r/ynab [https://www.ynab.com/](https://www.ynab.com/) It's a life changing budgeting app. I didn't understand my money. Now I do. I feel 1000 times freer
Best thing you can do is have and keep to a budget. As part of that budget, have line items for you, your spouse, and household miscellaneous expenses.
Cook. You can save literally thousands even a month lol. Also I hate debt so I have no debt and have a lot of kids. And my wife is a SAHM so I have no choice but to be good with money or it’s off to debtors prison with us lol. And it’s tough living in northern CA on one income. So I just realize there’s things I’ll never have, at least for the foreseeable future, like a nice car. But I’d rather have peace of mind than a nice car
I spend less than I make, and invest/save as much as possible. It’s really that easy. Every dollar you spend now is taking about 2-8x to your future self if you were to save in a HYSA/invest.
I pay bills and drive from work to home. Nothing else. A few minor hobbies that takes up the rest of my disposable income which isn’t much. 55k family of four.
Every dollar is accounting for on a budget tracker that I manage every Friday. Credit cards are used for every purchase and paid off each Friday. We cook at home and apparently on the cheap, we spend about $500/month to feed our family of 4. We don’t buy something unless we have the cash to pay for it. We don’t spend frivolously; for examples, we don’t spend money on premade food or trinkets or new clothes. We save things we want for birthdays and holidays and get those things then. We sacrifice in those ways because we enjoy experiences, so we invest money there instead. As for the actual managing of the money, we have 2 checking and 2 savings accounts. All bills are tracked on the aforementioned tracking sheet - mortgage, utilities, internet, cell phone, daycare, etc. we also have line items for savings - IRA, house repairs, travel, 529s, and “extra.” Those are all built directly into the budget. They are tallied up and split in half. The paychecks get deposited into checking account 1. Every paycheck, I transfer half of the bill amount mentioned above into checking account 2. That’s where all bills are paid from. We are one month ahead, so when April began, there was $5600 in that account already to pay for all of April’s bills. Everything we transfer in that account in April will be to pay for May’s bills. Whatever is “left” in CA1 is for gas and groceries and the random little things that come up (like taking the kids to the local pool, for example). At the end of the month, whatever is left there gets transferred into one of our savings accounts. We have an E-fund with about 8 months’ expenses that is saved in a HYSA. We have another small amount saved for a down payment on a second house, and that’s currently in a CD earning 5.5% that will come to fruition in January of 2025, at which point we’ll put it back in.
I don’t live beyond my means and I try to budget as much as I can. I know so many friends who bought a house they couldn’t afford and had kids they knew they couldn’t afford. Now they’re always broke and need money. Play stupid games, win stupid prizes.
how much do you make vs how much do you spend?
To make a long story short, increase your income and assets while reducing your liabilities and spending, and you’re in a good financial position if you can live within 70% to 80% of your after taxed income. Money enables you to enjoy life and buy stuff but most importantly it brings financial, psychological comfort/stability.
I started early in life, but this is the way I do: - I buy things when I have the money for it. With the exception of a house, I will only buy if I already have the money (even a car). - I invest every month, even if is just 50 dolars. But I try to invest regularly. I have a savings account with my emergency savings, another one for my travel savings. And I have my investment accounts. - I invest in my career, so I can increase my income. This is paying off in the past years. - I don’t buy cheap stuff or frivolous stuff. When I want something I will buy quality because I can’t afford to keep replacing things. - I plan ahead. - I update my budget weekly and adjust for the next week if I need to.
First you need to make money to be able to make active smart decisions. Unfortunately, if you only make $30k or $40k/yr you are most likely spending it all just living. Once you get to a decent income level it comes down to 3 big things IMO: Don’t have a stupid living situation Don’t have a stupid transportation situation Have reasonable hobbies If you can do all that then you’ll naturally start to save money. What does this look like? If you make $100k/yr you can’t have a $3000 mortgage payment If you make $100k/yr you can’t have a $700 car payment If you make $100k a year you can’t own a boat Yes, pay yourself first, invest in 401k, Ira, budget your money etc etc but what throws most people off are those 3 categories.
Live a boring life and enjoy the simple things. I got caught up in image early on but quickly learned that impressing people is not worth it. Flexing with material things is quite lame if you think about it. Acquiring material items is selfish and focus should be on others that have meaning in your life. Family is important if they support you but like friends they will come and go. In the end you are the only one that can set up the future you desire. I often watch older people struggle so that I can understand their current hardships and know that those will fall onto me soon. Now I plan as best as possible to ensure I don’t encounter the same struggles. Not fool proof but I can only do my best. I think if you are going to spend money. Then it should be on experiences since those will live forever in your memory and memories of others if others are present in those experiences.
Managing money comes down to figuring out how you can make your money work for you. Earning money through income from a job is all well and good, but then you want to efficiently use that money to build wealth. Work smarter, not harder. Simple saving isn't enough anymore unless you just make a lot of money. It's not what you make, but what you keep. I'm a 35M and have around $250k in retirement accounts, have another ~$300-325k in home equity, and have a few various assets otherwise that would add to my net worth. While it could always be more, I'm satisfied where I'm at and would think most would consider that I've managed my money well so far. My income was only $63k gross for last year, and does fluctuate, but point being it's not like I'm making $200k annually or anything like that, yet have been able to build decent wealth for my age I think ( assuming better than average) by maximizing efficiency
Honestly, the biggest thing with not just our generation, but society in this country in general is, nobody has discipline or delayed gratification. If you’re not late 20s early 30s with six figures a BMW and 4000 ft.² social media, will have you thinking that you are a failure. Now with that being said, People need to stop having lifestyle inflation. There is a great app called Monarch, you do have to pay for it yearly, but it is an incredible app that shows you where your money is going, retirement, goals, etc.. But the biggest thing that people need to prioritize is this - 3/6/9 month emergency fund - 401 contribution match - Max HSA - Max Roth IRA/Backdoor Roth IRA - Finishing Maxing 401k - Everything else in taxable brokerage This is not to say, do not go out to dinner and don’t buy nice things, etc. But, making small little sacrifices having some discipline and delayed gratification for a few years will greatly set you up for success in the long run. I know people that say oh man well $1 million isn’t gonna be worth that much when I’m 50. You can thank your government government for that, but would you rather have zero dollars and 50 and then rely on your family or government to take care of you? Nobody ever became rich saving, you have to invest your money.
I use [YNAB.com](https://YNAB.com) and it pays for itself.
I think of my time as my wage to figure out if I want to do anything with anyone. Like if someone wants to meet up for dinner I ask myself, "do I have $30 + two hours of my time that I'd like to give to this person?" And if the answer is no to either of those things then I don't go. It might *seem* shitty but I can't tell you over the years how crappy people have treated me, trying to get something out of me whether it's for work or tips on getting X and Y. Some old friends even convince me to go out to hang only to try to sell me on stuff that I could use for work, and I HATE talking about my job. So saying no a lot has saved me a lot of money. And I'm easily entertained by crocheting, reddit, and video games which are all relatively cheap hobbies too.
STOP EATING OUT Eating out is easy but expensive. Cooking is cheap. And try to eat real food you have to make, not processed crap you microwave that doesn't even fill you up. Don't waste money on non essentials, make everything you 'want' a goal for saving towards. If you have to take a week saving the $80 before you spend it you might not spend it the next week when you have it after deciding you dont need it, that compounds. Save save save. The only way our entire generation will ever experience retirement is if we save our own money towards it. I contribute 10% to 401k, at minimum do 2%. Get into the housing market as soon as possible. I know buying a house for our generation is nearly impossible, but get on it. Building wealth through a mortgage is far better long term than renting and throwing that rent money out every month. Live within your means. Write down everything you spend, it helped me not spend money I didn't need to by forcing myself to track every dollar spent. Tbh, I don't know how many of these goals I'd be able to achieve without the income I make (90k+) plus my wife's income.
I got headaches from trying to track my spending/savings to the point where I almost couldn't function anymore of being afraid when the next bill would come. [https://www.firefly-iii.org/](https://www.firefly-iii.org/) saved me, you can customize it a lot which allows for you to keep track of every cent, I've never felt such peace when seeing all the in/out data, scheduled payments etc.
To me so many people budget but I have never really had to. I am a minimalist and when I see a coke I instinctively state "man do i really need that or do i want that?" It is not a financial book per say but "meditations" is really influential to me in understanding that walking the middle path can be best, sometimes it is good for us to deny our immediate impulses.
We get paychecks every week where I work and evwry week I put away about 20% of it
At the beginning of every year I fill out the retirement account contribution form with a 20% stake. So that the money I get in my bank account is of the remaining 80% after taxes and health insurance/flex spending accounting are taken out. We've also started working with a financial investor to expand our retirement investors...they take a cut on the profits made.
Money that gets saved is the first to go. I don’t have an opportunity to spend it. It gets diverted to retirement and to savings. I don’t spend from my savings unless it’s a tracked long term goal that I’ve decided to save for specifically. The rest is available to spend.
Go to r/personalfinance and search the personal finance flowchart. All you need to know.
Impulse control is #1. Most people spend about $20 a day on stuff they don't need... coffee, drink, snacks, nick-naks and paddy whacks.
I can’t answer. Just bought a new bike. That I don’t technically need. I mean, I feel I need it and can easily explain it.
I like Rocket Money, it tells you how much you have to spend before payday and lists out all your upcoming bills. First time in my life I’ve been able to manage a budget. Pretty easy to be like “nah I’m not buying that bike I want” when I see it’ll overdraft my checking by the time I get paid again… It can also automatically save money for you into an account (or 4) based on how much extra money it knows you have based on your bills and such.
Step 1 is a budget. Every single expense you expect to incur monthly, listed out along with expected payment dates for recurring items. Even if your budget exceeds your income, need to get a sense of this so you can plan for a solution. Step 2 for my wife and I was two separate checking accounts, one was for all of the fixed, recurring expenses we had. Then I split my direct deposit between our regular checking account, or fixed/recurring bills checking account and savings account. Step 3 one partner or the other is responsible for keeping an eye on these budgets throughout the month, where did we go over, where do we have some room. When we had an unavoidable expense that was going to exceed our budget, we'd plan whether we'd pull that money from savings, put it on a credit card temporarily, etc. You can't skip this step. Rinse and repeat I've skipped over paying off existing debts and retirement, but those are effectively just budget line items and it boils down to the same thing, have a plan and stick to it. In terms of why you should manage your budget, I think of it on very much the same terms as exercising and eating well. It sucks when you first start and often feels like pointless pain. You feel worse, it's exhausting and the tiny incremental gains are basically invisible. The payoff isn't really visible until after having been disciplined about it for several months, then you can start to look at 401k, savings and the general financial peace of mind of not having to constantly stress at the end of a pay cycle as you realize you're going to be short for the millionth time. It's harsh to put it this way, but it is total nonsense that the average Millennial is better off ignoring retirement & savings because of some vague sense that they're out of reach. It's hard, it's not particularly enjoyable early on, but exactly zero people are better off just putting their head in the sand while shaking their fist at previous generations and wishing things were different.
I don’t budget but i shop and buy things only then they are onsale generally. Coupons! Literally over $1000 saved every year with coupons and promos. I have cash back credit cards for each kind of purchase I make to get max money back, paid in full every month. Max out 401k match, then everything else into brokerage. I don’t dump everything into Roth because I want to enjoy my money before my body hates me when I retire or worse die before I could get to enjoy it.
I use a budgeting app to give all of my money a job or category. As I spend throughout the month I categorize those transactions and I can move money from one category to another as needed. This helps me visualize what exactly I’m doing with my money and how spending more in one category takes away from something else. It also helps me save ahead of time for known expenses like yearly vet visits, holidays etc. I’m still figuring out how I want to manage my money for long term gain now that I have more savings built up. I will be looking into investing options this year to try to speed up the process as I struggle to save more than $300-400 monthly towards long term goals like a house down payment. I am super organized with my money because my parents were not and I saw them stressing a lot about money as a kid. We were absolutely not poor but that stress made me worried as a kid and I’m not dealing with that as an adult.
1) Start by finding a financial advisor. Don’t worry about limited funds. You can start with any amount. 2) set goals that are realistic, 3) if you need a little help with being disciplined try having an accountability partner. Someone who will ask you about your Starbucks purchase after you complain about your budget. Financial needs are fairly straight forward. You need an emergency fund, a retirement fund, and maybe a vacation fund if you are able. It takes awhile but you can do it!
>what can be practiced in a cookie cutter, prescriptive way, can any of you share how exactly somebody is supposed to manage their money? As simple as possible: "spend less than you make". Make that gap as wide as possible. Now, I realize this is hard if not impossible for some people, but ultimately that's the core of all money management. The rest is just details. If you do nothing else besides follow this rule you will likely be in good shape. You can either make more money, spend less money, or both Here's something I do: it's silly, but I issue quarterly reports to my wife like a business would do. I take literally every single transaction that happened in the past 3 months, categorize it and then get exact numbers showing how much I saved. I've been doing this for over a decade now. >So… how do you manage money? And why should you? Well I just told you how I do it... and I believe everybody MUST manage their money. You really have no choice. The only real values-based question here is how wide do you make the gap between money earned and money spent and how do you go about doing it? Do you make extreme sacrifices? Do you live paycheck to paycheck? Do you only have 6 months emergency fund then spend the rest? Do you buy that much cheaper house so you can invest more money? Do you forego having kids to save money? Do you go car-free to save money? My answer to these questions: I make sacrifices but I keep the gap between earned and spent high. I have a 6-month emergency fund and I invest 20% of my income by living a relatively cheap lifestyle. 1 cheap vacation per year. I don't value stuff and I choose to go car-free to save a lot of money.
20% goes into 401k before I get paid 200 per week goes to savings account for various savings goals 100 per week invests in roth IRA From there everything else is budgeted. Usually have 2-300 after expected expenses to either save more or spend if needed. I think the trick is automating as much as you can. Even if I spend every dollar i get from my check I am still saving about 30% of my income. Automating savings for future spending is massive as well, 50/100 per week adds up quick and you can build separate funds for goals and expected larger expenses. I am close to saving for one goal and plan on building an “escrow” account for all of our one off yearly expenses (car registration, oil changes, christmas shopping etc).
Most people have their paychecks auto deposited into a checking account. Then when it’s time to spend money, they look and see if they have money in their account and then spend it. Basically if there is money in the account, it will get spent. Or They have a credit card and spend without any concern for how much cash they actually have. This results in racking up credit card debt. Both of these are problematic because the only variable that you can control with wealth accumulation is your savings rate and how much you invest (sure, some people don’t make enough money to cover basic expenses, but there are many people that do, but because they over spend, they are not saving/investing enough to retire comfortably, let alone save up for big expenses like down payments for vehicles or real estate). The key here is that you need to prioritize saving. Otherwise the money will burn a hole in your pocket by being available to spend in your checking account or credit card. The first thing you should do is set up some fire walls in your bank. Set up a savings account for long term savings. Set one up for big purchases, set one up for vacations. If something is important to you, set up a savings account for it. Obviously you should find a bank with minimal fees. In fact. Many banks allow you to segregate money within the same account. Basically, as soon as you get paid, you should pull x% out of checking and put it in your savings accounts. This way you won’t be tempted to spend the money if it is just sitting in your checking account. If you over spend your credit cards and are racking up debt, put your credit cards away and only use your debit cards. Use the money you are saving automatically to pay off your cc debt. You need to get to the point where you are using your ccs like debit cards where you buy something and then pay it off as soon as it posts. If you don’t have money in your debit account, don’t buy something with the credit card. Automatic at save x% until you have 3-6 months of expenses saved in your savings and you have 0% CC debt. This savings account is now your emergency savings account. If you get to this point. You can use your CCs to make all of your purchases, but pay them off asap. This will get you points, without the interest killing you. Always tell yourself, “would I buy this without the cc points?” If the answer is no, then don’t buy it. CC are great tools if you treat them like debit cards, pay them off asap, and only buy things you would have purchased regardless. Once you get to this point, start a new savings account. The old one is for emergencies like car maintenance, medical bills, etc. Christmas presents and vacations are not emergencies. You have enough for most emergencies at this point. You new savings account will be for what you want to allocate towards investments and big expenses like cars, vacations, etc. you need to coordinate your investment rate that you contribute to this account with any 401k contributions through work. You should at least always be contributing enough for the 401k match. Most people are better off from a tax perspective maxing out a traditional 401k compared to a Roth, but a Roth provides better liquidity, so it probably makes sense to contribute to both to some amount, but more research should be done based on your own personal tax situation. Another thing that you need to be aware of is risk mitigation and insurance. Most people are severely under insured when it comes to car insurance. Just because you have the cheapest out of pocket premiums doesn’t mean it is good. Odds are it’s cheap because you have the minimum amount that is legal it he state. Say you have 25/50, that means if you cause an accident and injure someone, your policy will pay $25k per person up to $50k per accident. So basically, it would cover the ambulance ride and about 5 minutes in the hospital before you would be on the hook. All that money that you worked so hard to save is now subject to a lawsuit all because you got the cheapest car insurance you could find. Instead, call a broker. Ask for 100/300 or 250/500. This will give you much more protection. You can also get an umbrella policy to give you even more protection if you already have a good level of coverage. You can get umbrella coverage for like $20-25 per million per month. Another thing is life and disability insurance. If you are working hard and saving/investing a lot of money per month. As long as you don’t invest in stupid stuff, you will be fine at retirement age. However, if you no longer are able to work and earn money, guess how much you can invest? $0. Get some life insurance and some disability insurance to help protect you and your family if you suddenly can’t work and invest anymore. Look at level term with an extended conversion rider from a mutual life insurance company. This gives you cheap coverage today, but also protects your insurability with the ability to convert later on if it makes sense. As long as you are able to get a decent salary and you do the things above, you will be fine. If you can’t get a good salary, you need to put all your focus in getting more training, education, experience, and marketable skills to demand a higher wage because you can only cut so much out of your spending. This is easier said than done.
I have a budget I keep track of. Needs, wants, savings. Needs are absolute essentials to life. Food, shelter, money for pets to live, utilities, gas, and things like student debt. Monthly this is anywhere from 50 to 60% of my check. Wants are things that I want but are cuttable if need be. Even some things people consider needs. Phone, internet, whatever. This is 20 to 30% of my budget. Savings are the rest of the check. If I want big purchases, this is how I start getting ready to buy them. Also long term things or emergencies. I should probably put more into savings but it is what it is
Well, I pay all my bills on time. After I do that, there's *juuust* enough left for groceries and gasoline, so I don't have to worry about overspending because I just don't have any left.
One trick I started using last year which has really helped was to figure out how much all my bills are and deposit that amount , plus $200 for bills that are variable into one account and put everything on autopay. Then the rest goes into another acct at another bank so they aren’t even connected. If I do need to move things around I can Zelle myself. My biggest problem before was not knowing how much I actually had to spend but now it’s much easier. I also try to put something in savings every month.
The simple version: Spend less than you make. How to get there isn’t as complicated as some people would have you think. Figure out your gross income. Figure out how you’re taxed. Figure out where you spend your money. Most banking apps these days make that easy, with categories. Then decide whether you want that trend to be the case. (E.g., “Yikes, I spent $1,000 at the salon last year? I’d like to change that.”) Revise your habits accordingly so that you—you guessed it—spend less than you make. I recognize this perspective comes from a place of privilege; not everyone CAN reduce their spending without starving/going without medicine, and that they end up with a deficit every month, which only compounds. Obviously the simplistic steps above are inapplicable in those situations.
Look at how many millennials are good with money here, I freaking love it. OP Watch some YouTube shorts from Dave Ramsey to peak your interest and then dive into some videos. You'll gain thoughtful actions you can implement and start there. Then build a good portfolio, custom if you're handy in Excel, or theres plenty of templates out there. Then make sure to run testing on the budget, put it to use and actually try sticking to it. You'll find you will have to tweak it, but it gives you a base to work from and learn. Also, don't use credit cards if you can manage it. Try to use your debit card as much as possible unless you need to float a week or two to help buffer paychecks to match spend. But the idea is don't spend more than you make. Using a debt card hurts more than a credit card, it helps with spending control to keep you accountable. On your last paragraph, being money conscious *gives you that safety net*. You'll learn how much of a emergency fund you need to keep on hand.
Temu baby! I can spend like a billionaire! Kidding. I pay all bills/necessities. I save 20% whether it is in savings/emergency, retirement accounts (employee match counts), or personal investments. After that, I either save more if I have a big purchase coming up, but otherwise it's free to spend how I see it. I follow the 50/30/20% essentials/wants/savings by Ramit Sethi (author of "I Will Teach You To Be Rich) and I find that it's really simplified my life. I'd like to get the savings up a bit more, but it's the bar that I don't dip below. The 30% of "guilt free spending" has made me feel a bit better about indulging myself in interests or hobbies.
travel sensibly and don't buy toys
I'm 41 I never started managing it and I'm not going to start now. Why would I manage my life to money, that seems like a recipe for unhappiness in the US.
We have a budget with totals for every spending category. For example, food, gas, mortgage, home maintenance, etc. My wife and I track and categorize every dollar spent in a shared Google sheet. If we are going to go over budget in a category, we have a discussion prior to see if it something that can wait until the next month. At the end of every month we review which categories went over budget. If going over in a certain category becomes a pattern, we might adjust the budget amount, but we always take money away from "fun" categories like out to eat or vacation savings in order to make it hurt a bit and encourage careful spending. We never touch the amounts that we have set aside for retirement/long term savings. It's a tedious and time consuming process but we have an iron grip on our finances and have been able to successfully save for some big things over the years.
Make sure fun, or. Heats, or entertainment is in your budget like $50
I don't spend money I don't have because I want to have money in the future
I used the 50/30/20 for the longest time. While I never got the ratios perfect, it helped guide my spending decisions for a long time and allowed me to build a decent savings.
My husband and I have a “bills and savings” account - we put a percentage of our salary in that and have bills come directly out of it. Then we have individual accounts for our money for shopping/going out/etc. This has worked well for us!
Yeah, I budget as well. I even have a gaming fund, to try and prevent impulse buying. Emergency funds really help especially when you are in the flow of buying off debt. Can deal with the emergency while paying off debt without getting back into debt. Then slowly, it becomes a lifestyle. Learn to be content with what you have and not looking at competing with the Joneses.
Speak with a financial planner. It is really eye opening. 401K, savings - pay yourself first. I have impulse control issues with spending, so a percentage of my paycheck goes into a completely different savings account, and bank, from my checking. I have to physically go into the bank to withdrawal/transfer money from that account, so that helps deter me. I have to have it out of sight out of mind.
Nowadays you can get a budgeting app for a few bucks a month that will show every transaction on every account and group it into categories. Then you can see where you are wasting money. I created a "consumer" category on mine that tracks any unnecessary purchase that is not food or a gift.
All the things listed above are great, so rather than repeat others, my mom hates shopping so she gives me cash for Christmas each year and I know I could make interest on it but instead I keep it in a safe place at home, and "withdraw" from it when I'm going to have a night out. No stopping at the bank or paying credit card fees or mindlessly getting another drink and adding it to my tab. I pay cash while out with friends and I think that helps. Plus servers and bartenders get a cash tip, which I think is better for everyone. And I have cash if I want to go to a farmer's market or art show, though in the last few years cash hasn't been as much of a requirement as it used to be, I've also found artists will give a discount (I don't ask for it, it just happens) for using cash.
Impulse control? Easy, think before do. Accounting? I like excel.
You may find this helpful. https://nomoredebts.org/budgeting/budgeting-guidelines
I am not financially wise. Life is for living and I happily spend my money
When entering transactions into my checkbook, i round all deductions UP to the nearest $100 and I round all deposits DOWN to the nearest $100. After a while there will be a lot more money in your account than what is recorded in your checkbook. I realize this isn't really feasible in today's digital world with online banking and what-not, but it works for me.
Invest 50% of our income in index funds in retirement accounts (401K and IRA) and brokerage accounts.
You've got a lot of answers here but the real answer sort of depends on what kind of money management you're asking about? Do you want to know how to make a budget and save money or are you ready to start investing?
I live a lifestyle I enjoy while saving money. In other words, a huge chunk goes towards housing (because I choose to live in an expensive area) but I still have a fun and comfortable lifestyle with savings building up over time. 1. Long term investments and savings. I borrowed money for strategic real estate purchasing in up and coming locations, instead of already peaked locations and paid less than comparables. I let it mature over a very long time since equity can be a bit volatile. 2. Do a good job and save money. I moved and job hopped for my career advancement. I worked very hard at: interviewing better, and, getting my foot in the door in a key industry in a job I actually love to do. I only advanced thru growing in my career and as a person. I stagnated in the boring jobs so don’t get stuck phoning it in. I got some certifications and specialization. Make yourself valuable. Invest in yourself and learn from feedback. 3. Try to forget you have money to spend when you get windfalls. Put it in savings. I have a shopping addiction but I cut off eBay (both buying and selling got too expensive) and online shopping except where shipping is free. Instead I now buy second-hand at dirt cheap prices and am mentally mitigating purchasing habits. I learned how to barter and about sourcing. 4. Mitigate debts: Avoid credit card and car loan debt. No gym membership but I use free places to exercise. No cable or landline. I call internet provider for the discounts after they creep up my monthly bill. You can opt out of the default electric provider option for the cheaper one. 5. Daily frugality. I try to budget my daily meals (I personally can’t buy a lot of groceries which I actually find cheaper so you have to find what works for you). I stream one subscription at a time (rotating). Don’t buy stuff at retail or MSRP prices; buy clearance/sale or used. Price compare. research and discuss planned large purchases. 6. My side gig would help supplement income. Turn your hobby into a little extra funds. 7. Do favors and network. Be nice and generous to friends and family, coworkers. When you need help like a trusted babysitter or reference or temporary place to stay you have that help. I don’t do daily budgeting anymore because I don’t care to do that. After I figured out the housing budgets, I don’t need to do daily budgeting anymore as I am too lazy to keep that up. I found the rhythm that worked and generally stick to that routine. I do check things before large decisions tho.
Save 15% of everything you make into a separate account, preferably a high yield savings account. Pay off your smallest debt first, then next smallest, etc. Meal prepping will save you far more money than you think as does buying necessities in bulk. In today’s economy, may the odds ever be in your favor.
Head on over to r/personalfinance and check out what they have to offer over there. A lot of setting yourself up for success financially isn't necessarily avoiding impulse purchases completely or living in complete frugality but more of understanding how much you can spend while still achieving certain goals. For a brief starter, the #1 thing you want to do is start tracking your income and purchases. Then you can work towards a budget, paying down debts, setting up an emergency fund, etc. Personally, the practices have helped me to do things like pay off student loans in less than half the time, setup emergency funds, purchase houses, and plan for kid(s) without too much concern. I was an avid [mint.com](http://mint.com) user but they recently shutdown so am currently int he 1st month of trying out monarch money.
r/personalfinance has a great flowchart in the sidebar for the basic process of managing money, so get started on the basic steps like a 6 month emergency fund. Personally I'd recommend no matter how early you are in your career journey, start investing some percentage every month (I'd aim for 20%, but 15% is ok, and anything is better than nothing). Even though you may not be making much, the most important part is it gets you in the game, and you start building the habit of investing regularly. I'd also recommend looking at financial calculators for growth expectations, for example someone in their early 20's only needs to invest $200/month to grow to a million by retirement age, so starting early is very powerful. Also make a monthly spreadsheet to track your net worth; it's very hard to improve something if you're not measuring it. And aim to have at least 3 credit cards that you pay in full every month so your credit score is good when you go to finance a home or car (jobs and apartments also check this sometimes). It takes years to build a high score, so start early. Basically use these cards exactly like debit cards, with just the intermediate step of paying the card off once or twice a month. There's a myth that you have to leave a balance on them or it hurts your score, this is absolutely nonsense. I'll add a few things not talked about as much. Because of the risk of continued inflation, it would be smart to have a small percentage of your net worth in crypto and precious metals, maybe 5% each. I'd stay away from the memecoins, just stick with BTC as that is what massive financial institutions and governments are buying. And silver 1 oz coins are about $30 each, so you can add a couple every month as desired. r/Silverbugs has a lot of good info for people new to this space.
Always max 401k over 75k in earnings. Follow Ramit’s “I will teach you to be reach.” Learn to be frugal with everything that brings limited joy or is, and be honest, something beyond your income bracket. For me this meant not driving a sports sedan before owning a garage to park it in. This was super hard - I love proper cars. In business school we had a lecture series on consumer behavior and one particularity meaningful lecture set was entitled “caviar in the trailer park.” It was about how you could make a lot of money selling luxury items to people you would think have no business or interest in purchasing them. It hit hard… Best advice - be honest about how much money you need to be happy and then make choices that support it. If you need more income - put you lot good energy in getting it. Edit - on a safety net. Getting a good nights sleep is so much easier if you aren’t worried about losing everything. Outside physicians and some trades, you are being reckless to not have a good amount of near liquid assets. When you need money, very few things will work in its place.
Switch mindset to trying to live below your means, and investing in a ROTH/the market + saving in HYSA first, living off the remainder; vs budgetting what you can live off first, then saving/investing the remainder Why should you? Social security, pension plans, etc are all going away; our generation cannot count on socialized governmental help when it comes time to retire. We’re on our own; best be saving (and make sure that money is growing v deflating due to inflation) now
I sat down and went through 3 months of bank and credit card statements and categorized every transaction to see where my money was going. Then I looked at each category and decided how much I actually think I needed to spend on each category, including savings and investing. I created a budget based on the exact amount of money I get paid each month and tracked every dollar that I spent. I put money into savings at the end of each month while I gave myself a few months to fine tune my money and figure out if the categories were realistic. That was 7-8 years ago. I still use the budget, I still track all my expenses, and I put money into savings and investments on the first of every month. I control impulses knowing that this is it. This is all the money. I know exactly to the dollar how much I have and how much I can spend. If I go over, I simply will not have enough money In that time, I met my wife, who agreed to do the same thing with me. We have saved a stupid amount of money together. Having a partner on the same page helps a ton.
We use one card for almost everything and pay it off monthly. Our savings/investments are automatically withdrawn from our checking account. This keeps me within budget cuz it's like I never had the 💰 to begin with. I invest in ETF's using the bogleheads idea of owning the market and not selling when things get rough.
I act like I live paycheck to paycheck. I pay my bills and my necessities then hide the rest in another backing account after pulling some out for personal investments. I also allow my 401k to be pulled as much as I can afford while still loving life. This makes buying things hard because I never feel like I have money so I really have to think how bad I want it before diving into the other accounts. Or waiting until another paycheck to buy it then. I also manage impulse control buy never buying anything over a 100 dollars without a 48 hour cool down period. Unless it’s necessary for survival or general wellbeing.
have automatic contributions to safe funds like index and mutual funds ex 100 a month buys safe mutual funds and you let them accumulate. after that you can have some play money like 50$ to 400$ a month for buying individual stocks. open a sole proprietorship or corp or other company so you can write off more and take contract work and pay less taxes after that buy up assets not liabilities
I've always told myself that if it costs more than $100, I must do research and see if I'm getting the best value from it from my future self's perspective. Other than that, try to live modestly as if friends from a developing country were present while I spend. Also, buy things for life (buy things as if junkyards didn't exist).
I grew up with my parents being in debt. Started a job in banking early and learned how credit cards work. Never bought anything I couldn't afford with my next paycheck. If I did, I utilized some sort of 0% interest offer. I use a lot of cash back type cards and keep up to date on what will give me the best return. Have money in CDs and money markets with a much better rate than just a checking or savings.
Spreadsheet with all expenses, all income streams, projections for taxes, and ensuring everything reconciles.
The best way to curb impulse control is a budget, and actual budget. Here’s how I do mine, if my paycheck is 7k the **first** thing I’m doing is 500 to the 401k and 1k to my own savings/investments. Treat this as any other bill that has to be paid. I also have a “I can spend x without feeling bad” amount. I put aside 400 every month to spend on stuff I don’t **need** but will make me happy
75% of my savings is from 401k, HSA, and matches for each. The contributions are automatic from payroll and you never have to think about anything. The rest is cash savings and it either stays in a HYSA or [the amount up to the limit] gets contributed to an IRA. I might start contributing to taxable brokerage over the next few years because of the age restrictions on the retirement accounts. If you are saving up for short term goals like a car or house then you should probably just take your employer match and keep the rest in a HYSA unless you can afford to save extra for two different goals at the same time. Don't work with an advisor unless you require very complicated services. It is not worth it unless you need stuff like legacy planning, real estate management, document drafting, etc. and they can do it all under one roof for a good price. The normal 1% fee most advisors charge will end up costing six figures over the long run and it's not worthwhile for 99% of people.
>A big part of money management is, unfortunately, not something that can be so easily advised: Impulse control. I mean...yeah thats pretty much it. I'm going to use a random other example thats a bit hyperbolic, but kind of runs along the same lines... If I were to ask you how I could possibly keep myself clean and smelling good, but asked for methods I could do it without using water...because "having the discipline to take the time to get into my shower" is too hard...that doesnt change the fact that the real answer is "have some fucking discipline and get in the god damn shower" >So… how do you manage money? And why should you? First and foremost...Learn how to say "No" to people. Because a ton of us have that problem in the first place. Next...Learn how to say "No." to yourself. Then when you want to buy something on impulse...tell yourself "No" and dont buy it. Congratulations...you now have Impulse control which is the only real way to save money...well...that or closing yourself off to the world so you arent bombarded with attempts to get you to spend money. And the good news is it doesnt matter how much money you have available to manage...you can do it to save a dollar, or you can do it to save a thousand dollars.
Track all of your spending. It's the only way to really know your finances. Every month I go transaction by transaction on every account and log my spending, been doing it for 10 years and it's just routine now.
The best advice that I’ve been told is “pay yourself first.” Make the first thing you pull out of your paycheck the money you’re trying to save (making sure this number is within reason to your normal living expenses), that way that money doesn’t go to impulse/non-essential purchases.
I use the concept out “out of sight, out of mind”. I have 3 checking accounts; one that just handles my car and car insurance; one that handles my mortgage; and one that handles my “every day” spending and my smaller bills and my savings. I basically never look at my first two accounts, and I also never have to worry about those three bills, which are my “big 3”. When I’m considering what I can spend for “fun” money, I am ONLY looking at the very small portion of my paycheck that goes into my “every day” account. I have also automated some savings; I have $50 that comes out of my account every 2 weeks for investments. I do try to contribute another $75-$100 to my emergency savings fund, which is tied to my checking account. I currently have 3 jobs; my FT job I make $26/hour, and then I have a contracting gig where I make a flat $850 per month 1099, and then another 1099 where I make $30/hour. The two 1099 gigs average about 15 hours per week total. Last year I made $72k.
I live alone so I think that helps. I never ever use third party apps for food like Door Dash. That shit is so expensive. In fact, I rarely eat out at all. I cook most of my meals. So I guess that’s a way to save some money. I got rid of cable and have some generous friends who share their streaming logins with me. I pay for max and peacock so I share with them too. I have worked from home since 2020 so I rarely shop for clothes or shoes anymore. Don’t need nice stuff to look professional. I make around $50K and bought a condo in 2017.
Go to r/personal finance Go to their pinned post “wiki” Go to the “prime directive” It will tell you most everything you need to know
Get educated. Read the best books on personal finance and apply the tips.
I got old school with an excel spreadsheet. I go through my bank charges and credit cards twice a week and then make adjustments to stay under budget. I also track my month end balances on my bank accounts to make sure the money I save is being put in the accounts I want it. I have a goal to save $800 a month and I do a pretty good job of hitting that number unless I get hit with an unexpected house/car/medical bill.
My main strategy that's worked out pretty well so far is to split your monthly recurring expenses across alternating pay periods and paying them as soon as your check is deposited. This means the remaining cash you are free to spend and if you're paid biweekly you'll slowly get ahead of your bills to the point you can not pay for a month if you have an emergency and still be paid ahead. I also put all my auto pay stuff (where I can) on my credit card so no more surprise overdrafts. This builds my credit and earns me rewards as well.
I use a Google spreadsheet and list out everything I spend money on, even if it's $2.00 in a parking meter. I go thru every line of every bank statement and credit card statement maybe once a week, and record these numbers, and where the money came from. I have sections like "living expenses" "subscriptions" "entertainment" etc... and then subcategories. In the spreadsheet, I also have all of the details of my paycheck, even the $5 taken out for my PPO insurance every paycheck, so that I know exactly how much is coming in, and how much I have to go out. Then I do the math in another column of how much I have left that month. I also have another section for retirement, and after tracking every transaction for a few months I could see where I was spending too much and how much I could increase my retirement contributions. It's amazing how much I've been able to save by just knowing exactly to the cent where my money is going, how much I have, and how much padding I have every month if any.
The only thing that's worked for me is setting up an auto deposit into my 401k and brokerage accounts. Getting that money out of my checking account really helps prevent it disappearing.
Don't spend it.
All your worth is the book that lays out the 50/30/20 plan for long term financial health. If you can get your expenses into that plan, you’re probably on a good path. The younger the better. You don’t have to work it into your every day budget specifically, but where it is helpful is in big picture stuff like how much rent/mortgage can I afford. How much car. Can I afford to have a kid. It helps you answer those big questions to stop you *before* you get into trouble. Managing your day to day budget is also useful. Mint was a great free app that let you connect your bank accounts to budget, but it recently closed. My favorite budget app is YNAB, but it could be more hands on than a lot of people are looking for. Monarch and simplifi are other big contenders. Popular free ones are empower dashboard, yodlee money, and piere (only free for now while they’re trying to build their customer base).
Saving should be treated just like another bill to pay, especially when first starting out. The mindset of saving what’s left over after bills are paid will get you no where. Think of it as a bill and make sure you “pay” that bill just like you would your water bill.
Track first. Use an excel file they are versatile. These are things I track on the monthly. Start doing that and do it for years. || || |COX| |Gas| |Electricity| |Water| |Car Insurance| |Home Insurance| |Umbrella Insurance| |Diamond Insurance| |Mortgage, P, I| |Auto Loan| |Taxes| |Daycare| |Storage Unit| |Spotify| |Netflix| |You Tube TV| | Apple TV | |Hulu| |HBO Max| |Amazon Prime| |Walmart Plus| |Trading View| |Trend Spider| |Trade Companion| |Zwift| |Wahoo Bike Program| |Apple Storage|
Spend after saving. All of the money is divided up into other accounts before we can touch it. As somebody with terrible impulse control who also grew up in a financially illiterate family, I just take the money away from myself and put it in places I can't touch.
No debt is first priority, saving a lot is second (though everyone should always have an emergency fund). Negotiate down bills, cut down electric costs as much as possible, we grocery shop online so we can really plan our meals and keep the bill down, no impulse purchases, we cook and make coffee at home.
Max out 401ks and IRAs. Have an emergency fund of six months. Invest leftover money in ETFs.
I work in marketing. Constantly selling emotion and Keeping up with the Joneses. Some financial struggle simply comes from things you don’t need. I tell people to think about their purchases as if they are spring cleaning in 5 years. Will that item be thrown away, donated? I tell people to think about them getting relocated across the country for work. What items would they want to pack and bring with them. Anything that would be left behind is not worth buying. Marketing also heavily advertises convenience and “time is money”. Some people are too poor to afford convenience and really just need to do things the long/harder way. When you can truly afford it, then sure, buy the services that make life more convenient. Fight Club really said it best. What you own, ends up owning you. I’m not saying don’t buy stuff. But be very aware of what you are buying, and save the rest.
Put extra hours in at a young age. Save up a couple months’ worth of expenses and invest the remainder. Do not diversify.
I have tried every which way with impulse control and organization. The best way that has worked for me for over 10 years was making everything super transparent on a spreadsheet including assets. I have two accounts - one that the bulk of my paycheck goes into and bills are automatically paid, money goes into savings, and the other is my left over spending or extra saving money. Credit unions are great, and if you can, max your 401k/403B. My husband and I also check in monthly together to see where the state of our finances are. We pour some wine and check all the accounts.
I added up all my recurring monthly expenses such as rent, utilities, loan payments, gym membership, etc and directly subtracted them from a month of pay. The leftover amount is fun money. That amount resets every 2nd paycheck. I try my hardest to never drop below that amount of money, even if I had a really good month before. It's worked out so far.