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How do I balance spending and saving?

My instinct is to spend only what I have to, then spend the rest on luxuries. What are some strategies for developing healthy financial practices? #college-advice
#personal-finance #savings

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Richard’s Answer

Make a budget. Once you see what you are actually spending money on you can decide if it was worth it. Over time you will learn to decrease the unnecessary spending and begin to pay off debt and eventually save for the future.
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Johannes’s Answer

I recommend spending with the end in mind. In other words, map out your long-term financial goals, and spend your money accordingly. If you are working full-time, make sure you are putting enough money away every month so that you will have enough to support yourself when you retire. If you are still a student, you may want to think about some other financial goals, like paying off student loans or buying a car. Set up a savings account where you put that money aside FIRST, then spend the rest as you see fit.


Best of luck!

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Jacob’s Answer

Hi, Zachary,


Johannes gave you a good overview on how you should spend at a high level - focusing on financial goals is a sound practice. Building a savings account to buffer unexpected circumstances is a very important first step once you graduate and start working. When you're in college, you have to spend carefully since there are so many different costs to bear (tuition, books, housing, food, etc.). Building a budget is helpful. A budget is like a roadmap to achieving your financial goal. Whether you are trying to break-even or save for a specific thing/event (car, retirement, engagement ring, etc) a budget will help you reach your desired end state. The link below is a helpful start but you can use a spreadsheet to make your own version.


I hope this helps - good luck!

Jacob recommends the following next steps:

https://www.clearpoint.org/tools/budget-calculator/
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Vic’s Answer

I recommend reading the book "I Will Teach You to Be Rich" by Ramit Sethi. It was a great read and in my transition to adulthood I read it and it set me up well to be financially responsible.
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Donald’s Answer

All great answers above, I would just like to recommend looking into the art of minimalism. By no means do you need to live in the extreme (I certainly don't), but by learning more about minimalism, it really helped me realize the amount of money I was spending on stuff that I really didn't need and enabled me to focus on saving for the things that really matter to me.

Donald recommends the following next steps:

Here's a good resource. I like these guys, they have a good approach. https://www.theminimalists.com/start/
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Amani’s Answer

Hey Zach,

Write down all your Bills, and things that you would like to do monthly and create a budget. Once you have that write down your long term finical goals and compare. This will give you perspective on what maybe you need to scale back and where you need to save more or where you can save more. Always save more than you spend and spend smartly. Creating a monthly allowance for yourself to spend on what you see fit helps keep you in check as long as it is within the confines of your budget. Hope this helps!
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Jeff’s Answer

It is important to match your income with your expenses. One way to do this is create separate accounts for specific goals.
1) A working capital account - paycheck goes into it and expense are drawn from it. 70-80% of al lncome
2) Create an investment account - and deposit 10% -15% of your pay into this account and invest for the long run 3-5 year.
3) Create a fun account for discretionary purchase -10-15%

Once you have created this framework then ask yourself how much do you really need specific items or experiences. Then sit on it for a week or two all while looking for better deal. Then if after that time frame you really need a specific item or experience then by all means purchase it.

Taking this disciplined approach should insure you don't waste money but more importantly save for the future.

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Craig’s Answer

This is a great question, and the answer is actually probably more simple than you would expect, but like most things... easier said than done. The first step to balance spending and saving is to create a budget, this way you can see exactly how much money is coming in and how much is going out. This way you will be able to see exactly where every dollar is going, once you know this you will then be able to see what crazy spending habits you may have. You may realize that you are spending more on non essentials than you have originally thought, if you can cut down your expenses this will allow you to save more. Also once you have more money to save, you can then start putting the money to the side and put a name on it, say you make a savings for a new car, or a new house, or to pay off college debt etc etc. There are many ways to create a budget, but you can go online and search how to start a budget and this will really allow you to see what you really are spending and saving. I hope this helps!
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Rachel’s Answer

Attending classes at a community college, choosing a state school, and applying to all scholarships available can minimize cost.

Additional ways to save are to use a debit card or cash rather than a credit card, stick to your budget, avoid eating out, and balance your checkbook.
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Rebecca’s Answer

Thank you for your question. It is good that you have the concept of financial planning in your mind.
Below is my suggestions :
1. Firstly, you can put down your income every month, e.g. wages from your part time work, pocket monies form your parents, etc.
2. You can then divide it into 3 portions :
1. Saving - Deposit into bank accounts
2. Basic expenses, i.e. meals, transport, etc. - These are the things you really need.
3. Other expenses - These are the things you want.
Hope this helps! Good Luck!
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Evan’s Answer

The best advice I ever got when I started working was to take advantage of a 401k. Most larger companies offer you the ability to direct money straight out of your paycheck into these retirement savings accounts and, what's better, they typically match your contributions up to a certain amount. That means if you put $1 in, they also put $1 in on your behalf.

Take some time to think about how much money you are comfortable directing from your paycheck each cycle and then set that automatic contribution. Since the contributions are being taken out of your paycheck before getting to your bank account you never have the chance to spend it. Even better, after a little while you'll just get used to that amount of money not being in your paycheck each week and learn to tailor your expenses accordingly.
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Julia’s Answer

Hi Zachary,


Jacob and Johannes gave you some great advice about budgeting and spending with the end goal in mind. One thing to add is that, in my experience, financial responsibility is all about your mindset. During my five years in college I had to balance classes, extracurriculars, and working every day to pay my bills. I had to constantly tell myself that every dollar I spent on something I didn't really need, was a dollar I could've put towards my first car or towards my long-term savings. Establishing your financial goals, and believing it is important for you to work towards them, is an important first step!


If you are just getting started with budgeting, many people like the Mint app. Mint allows you to link your bank account to the app, and analyzes how much you're spending in different areas. This is especially helpful if, for example, you spend as much money on eating out as you do on rent. That should tell you to try cooking at home more often! I haven't used the app myself, but I have a ton of friends and coworkers who love it.


Hope this helps, and I wish you the best of luck!

Julia recommends the following next steps:

Make a list of financial goals - both short term and long term. Brainstorm ideas for how to achieve them.
Check out Mint: https://www.mint.com
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