“How do I adult?”
I find myself staring in the mirror asking this question all the time. How exactly does one “adult?” What makes you an adult?
My ideal Saturdays still consists of laying around eating Chick-Fil-A and binge-watching Netflix, or day drinking on the beach. My week nights still include a nightly struggle of “gym or pizza.”
But I also spend an abnormal amount of time at Lowe’s looking at flooring and counter tops for our new home. And I’m now partial a nice wine and cheese get-together over a crazy night at the bar. I work 40 hours a week and have a 401K. Does this mean I’m adulting?
Needless to say, your 20’s is the most confusing decade of your life when it comes to.. just about everything. Especially finances. What you should be doing? How much money you should be making? How much money you should be saving? And what you should be doing with said money?
I’m here to share with you some tools and tips I have learned over the past few years for gaining financial stability in your 20’s. I’ll get back to you when I’ve successfully implemented all of them…. but you don’t succeed unless you try, right?
1. The Half Payment Method
How much does it suck when you get paid and it seems like your entire paycheck goes to bills?
I originally learned about this method here.
The concept is that when you get your paycheck (typically bi-weekly,) you put aside HALF of what you’ll need to pay all of your bills for the month.
For example, if your bi-weekly paycheck is $1,000, (so $2,000 a month,) and you know that your total for bills for the month is $800, you would put aside $400 from each paycheck, leaving you with $600 to save or do with as you wish. This lightens the load, especially if all of your bills are typically due around the same time each month.
And if you lack self-control, most companies will allow you to pay your bill in 2 halves, so that way you physically get rid of the money and there is no temptation.
2. Digit- Automated Savings
This is one that I have mastered, and have LOVED. I set up an automated savings account with Digit (click that unique hyperlink to sign up once you have been convinced, and help me earn too!) and I have never looked back! Digit does the work of saving FOR you based on how much money you have in your account. You link your checking account to Digit, and every few days, the automated system will withdraw a few dollars at a time (you won’t miss it, I promise) to a savings account. There is a “no overdraft guarantee” and you can check your balance or withdraw at any time just by texting the number provided to you.
I typically use Digit when saving FOR something, like a new outfit, or a vacation. These splurges don’t feel like such a waste of money because you’ve been saving for them overtime.
3. Assess Your Living Situation
“They” say that you should not be spending more than 25% of your overall take-home income on your dwelling (be it an apartment, condo, home, etc.) I have found this to be a true representation of how much you can really afford to spend on your home alone. Then you have to factor in utilities, pet rent, etc. Plus, your 20’s is a time where between work and your social life, you’re likely to not be home much anyway.
It’s easy to get roped into spending too much money on a place to live because you’ve gotten wrapped up in a cute neighborhood, or an area close to bars and restaurants. But be sure to weigh your options- looking just a little bit outside of the area where you want to live can yield surprising results.
It is also useful to consider room mates- fortunately for me I have one in the bag anywhere I go (love you Arek!) Unfortunately for me, I also have two dog children who take and take and take and simply REFUSE to chip in. When we were looking for a new home to live in this year, we came to terms very quickly with the idea of needing a roommate. Sure, we would have enjoyed living alone, and having our own little “space” to play house, but I also enjoy saving a couple extra hundred dollars a month for other things (like our insanely high electric bill- haaaaaha.)
4. You Can Never Save Too Much For Retirement
I absolutely do not claim to know much about investments. But what I do know, from the many reminders and gentle nudges from my mother and grandmother, is that saving for your retirement is extremely important. If your company offers you a 401K, you NEED to take it, or consider your other retirement investment options. Though it is dense material, a quick Google search should give you a lot of the information you need about your options, and your company will provide some pretty comprehensive literature on your company’s investment opportunities.
It seems so tempting to keep all of the money you are making, especially when in America, we’re often handed a degree and thrown into the world with nothing but our nerves and our crippling debt. However time will continue to go on, and if you keep putting off investing in your future, it will never be a priority. And along the same lines- don’t EVER withdraw from your 401K. It may seem tempting at times, but trust me… DON’T. Your 65-year-old-self will thank you.
5. Know Your Credit Score
This is one that I haven’t followed as closely as I should. But you should get in the habit of checking your credit score once a year, every year. Not only will you learn how your credit is calculated, but you’ll get a feeling for which choices are greatly affecting your credit- negatively or positively. It will also be a good way for you to level-set.
6. Keep To A Reasonable Grocery Budget
It is paramount to keep a reasonable budget and plan for things like food, since it is so easy at our age to get caught up in constantly eating out, going to happy hour, etc. The best way I have found to save money on food is to learn to LOVE cooking, trying new delicious recipes and saving money all at once. Plus, most of the food you prepare yourself is typically healthier than the stuff in bars in restaurants- that sounds like a win-win-win to me.
Pinterest has a host of great resources for grocery shopping on a budget. Read them. Live by them. Reap the health and financial benefits.
But it’s also completely reasonable to go out to eat/drink sometimes. Just set a general budget for each outing ($15-$25,) and limit these outings accordingly, depending on your lifestyle. For example, when we lived in our previous home further from town, we would eat out less (maybe 3 times a week) and now that we live closer to town, we eat out much more than that. To start- take the amount that you go out for food and drinks and divide it by two. Reaching that goal will take discipline, but it is do-able and you will see the benefits almost instantly!
Though finances and budgeting can seem extremely overwhelming, all you need to do is take a few baby steps at a time towards financial stability in your 20’s. And you’ll feel much better! What do you do to grow your savings and manage your finances?
Leave your comments below! I’d love to hear.