4 answers

How do I balance spending and saving?

Updated Flagstaff, Arizona

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

4 answers

Julia’s Answer

Updated Seattle, Washington

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

Johannes’s Answer

Updated Tampa, Florida

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!

Jacob’s Answer

Updated Cleveland, Ohio

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/

Donald’s Answer

Updated

All great answers above, I would just like to recommend looking into the art of <span style="color: rgb(34, 34, 34);">minimalism. By no means do you need to live in the extreme (I certainly don't), but by learning more about the 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.</span>

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/