How do I save without being too frugal?

So recently I’ve began getting into saving a ton. At the same time, I’m trying to pay off debt and I️ have so many vacations planned it’s hard to think that savings is an option!–especially being a bartender with an unpredictable income.

Here are some steps I’ve taken to make my savings account grow and grow the last two months, and it’s (mostly) the same process that helped me save $6000 before starting college:

  1. Know what your bills are every month and how much you are spending with disposable income. I️ have an excel workbook that I️ have documented my finances in the last 5 years that has held me accountable/make me realize when I’ve been going overboard with spending.
  2. What you’re spending shouldn’t match what you’re makingI’ve cut costs down when I️ realize I’ve gone over my “going out” budget or spent a little too much Black Friday shopping. Also, if you’re spending more than you’re making (yes, I’m talking about that Capital One with amazing cash back) notice and realize you do have to pay back on your debt. That’s something I️ didn’t have to worry about in my teens but do now in my twenties.
  3. Not all debt is bad! I️ mentioned the cash back Capital One card because that is one I️ have and it’s helped me so much when in a pinch or traveling and has treated me so well with cash back opportunities! Use your credit cards when you know you’ll still be able to pay more than the minimum balance to pay it off!
  4. Budget/plan for bills to be higher than expected. Utilities and cell phone bills can bounce up and down from month to month, so it’s better to plan for the bill to be on the higher side. And, hey, if it ends up being lower you can take yourself out for a cocktail or even transfer the extra to savings!
  5. Save WHILE you pay off debt! The two processes are not mutually exclusive. I️ try to put half of what I️ make in savings, but that’s not always realistic. After moving back in with my parents, I️ re-budgeted and realized that I️ could save more… or I️ could pay off more debt. I️ upped my payments on–well–everything to ensure I️’m molding my credit into a homeowner-with-a-good-interest-rate’s credit. If that hinders the amount I’m saving, it’ll still be beneficial in the long run.
  6. Need only apply to service industry workers… I️ said I️ put half of the money I️ make into savings. That means after a long day of work, I️ schlep over to the bank and deposit money into my account and transfer half into savings (if I️ can). Yes, big things come up or you’ve got a cash flow issue—I️ just write it down to remind myself I️ owe my savings that extra $78. Now, to avoid this, it helps to have a couple hundred un-spoken for dollars in your checking account for just-in-case situations. Also, on the off chance you get a paycheck on top of your tips, throw that (or at least a portion) into your savings as well–you weren’t expecting that money anyway!
  7. Hold yourself accountable to your savings! I️ realize half of a persons income is not going to be realistic for every person to do, so find a specific amount or percentage that you think is reasonable. For the last year and a half, I️ predicted my income and estimated all of my bills and realized it was only reasonable for me to save 30% of my income because bills were higher. Don’t make your finances so tight you can’t enjoy a night out or a weekend away. Aka, treat yoself!
  8. Know when to bring out the savings. I’ve had so many unexpected things come up this year that you will hear about in future blogs. Anyway, its hard to plan for a large hospital bill, a car repair, or needing time off work for any reason. This is where your savings comes in handy. I’ve been trying to save for a house, but at the same time I’ve had to take time off work for an injury, I’ve had to take trips on a short notice, I’ve been hospitalized for strep twice, and I’ve moved. All of this happened in the last two months and I’d be lying if I said I didn’t dip into my savings to keep things afloat as everything seemed to happen at once. In other words, savings are useful for emergencies!
  9. Decide what you are saving for! Obviously, you want to grow a cash cushion for emergencies, but you also have other things that you have to budget for. Whether it be a trip to Europe, a new car, a new house, or a new business opportunity, there is some place you are allotting that money. Define your goal, find out exactly how much you need of cold hard cash to reach your goal, and that number can be your financial savings goal.
  10. What’s a cushion? I’m not talking about furniture. I’m talking about how much you can realistically have there in case something catastrophic were to happen. A lot of people have a credit line for this purpose, but it’s always better to have the cash in an emergency than to borrow it. My mom has always said that you should have six months of living costs in savings while in your twenties in case anything comes up–and eighteen months if you have a family. Again, not always realistic and many people have other resources. It’s just your safest bet to make sure you have yourself covered before buying that new sports car.

What kind of projects and adventures are you saving for? How has saving money helped you reach your personal goals?

Would love to hear your feedback on this piece! It’s worked for me so hopefully it will help any of you!

XO,

Sonja

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