Help! I Spend All My Money.
Here we go. The top question I’ve gotten since the launch of this site.
How on earth did I save so much money during college? The answer to this question is honestly pretty boring.
People asked me a lot of ridiculous questions after I published how much I’ve saved. Let me just start by dispelling any rumors.
I didn’t win anything. I didn’t get a ton of money by receiving scholarships. The biggest scholarship I ever got was the $732 middle-class scholarship (Thanks, Obama).
Here is the big one: “Did you make all that investing in the stock market?”
The answer is no. Actually, the only investing I do currently is through my retirement accounts.
Like I say in my introduction to this website, it all has come from simply saving money I’ve made from working throughout college.
What Do You Mean No Stock Market?
I’d like to actually address the stock market question specifically. Stocks are sexy apparently, because that’s what everyone assumes is the sure-fire way to make money. Don’t get me wrong, it is. But any finance professional will tell you the stock market is a long-term play unless you’re a wiz like Warren Buffett. Even then, you’re going to need a bit of knowledge and a ton of luck to beat the markets.
You also have to understand where you’re at in life. As a college student, I can’t imagine you’ve got tens of thousands in capital just lying around at your disposal to invest in the stock market. Well, then again, I suppose many reading this went to Del Norte High School. Scratch that, you might.
All kidding aside, the amount of money you could put into investing would buy you probably a handful of stock shares. Not thousands. Unless you’re going to do some penny stocks, Jordan Belfort sh*t. If you are, god speed. A handful of shares even getting you a huge return (20%+) would make you a small amount by the time it went through Short Term Capital Gains Tax. As any accounting student will tell you, it’s hefty if you sell a stock if you haven’t owned it for over one full year. Yes, less than one year is considered short-term by the IRS.
Save More Today Than The Stock Market Will Make You
Here’s some food for thought. Let’s say I think Twitter is bound to shoot back up in value after Disney & Apple both decided to not purchase it today. (Did you know Twitter is for sale?) I put in $500 in order to purchase 25 shares at $20 a piece. Twitter comes through for me and shoots up 20%. This is a HUGE gain. I mean, seriously read that as a Donald Trump HUGE.
The stock price is now at $24. I made $4 on every share I own. My $500 turned into $600. HELL YEAH. Let’s cash out. I made 100 bucks doing nothing. BUT…now it is time for taxes.
Short term capital gains is done by your income tax bracket. Let’s say I’m in the 25% bracket. My 100 gain is now only 75 bucks. Thanks again, Obama.
So you made $75. You know where else you could have gotten $75 from? By just saving $75 from your paycheck instead of spending it. Chances are, you can end up with more money by just saving that you can make doing short-term sales in the stock market without investing a lot.
The Truth Is That Saving Money Is Boring.
To get better with money, you have to start by learning to save. People hate this. Mostly because it takes a while to do and also to get good at doing. It takes the commitment of making it a habit. You can’t half-ass it and do it for two weeks like people who promise to get themselves into the gym every new year.
But let me tell you something I learned.
You Learn To Love It
It took me a while to get going, but once I was consistently saving money, I loved it. You get excited to see your bank account balance growing and begin to set mini-goals for yourself. The more you start to save, you’d be surprised how much more you watch every aspect of your spending.
So How Do I Spend Less? I Have Bills, BRUH.
So do I. And I also love going out with my friends and buying stuff. But it can be done! Slowly but surely.
HOW TO START SAVING
- Figure out how much you’re spending.
- This might hurt. It’s like waking up after a night out and checking your bank account.
- Start by going back through your bank account and determining all your spending for one full month.
- You can’t start saving unless you know how much you’ve got to manage
- Many banks offer a tool to check your spending categories and break it out for you!
- Determine money spent on needs vs. wants
- Figure out what you have to spend money on (Rent, food, utilities, gas, etc..)
- Figure out how much you’ve been spending on wants (Going out, drinks, eating out, movies, dates, your Amazon cart)
- Make A Budget
- You can do this easily in Excel if you like that or I recommend Mint.com.
- THIS IS KEY TO STARTING TO SAVE
- Figure out how much money is coming in. (Paycheck)
- Take away all money you must spend on your needs
- You’re left with money you probably normally spend all on wants
- Determine How Much You’ll Spend On Wants OR how much you want to save
- This can start two ways. People who are looking to really start saving may decide how much per month they want to begin saving. They save and then the left over is “spending money”
- This might be tough for those who go out a lot currently or feel like they’re always low on cash. So start by deciding how much you’ll spend on those wants. $200 a month, $300 a month. Whatever it is.
- The rest will be your savings
- STICK TO YOUR BUDGET
- This is all your own self motivation. You have to stick to the budget. Divide your monthly spends into weeks so you have $50 a week to spend instead of one big sum you blow through at the start of the month.
- Set limits through your bank. If you really have issues with this, you can tell your bank to cut you off. You can set a limit on yourself that once you spend a certain amount, the card stops working.
- Put money into you savings account. Ideally one that might be separate than the bank you use for your checking/debit card. That way it’s harder to touch. So you’d have to request a transfer and wait a couple of days before getting it in your account.
- Don’t take it out. You’re only hurting yourself.
- Watch your money grow!
- This isn’t rocket science. It’s easy to do but hard to stick to doing. Just like going for a short run everyday isn’t that hard, but the hard part is you have to keep doing it.
- You also don’t have to only save money for no reason. Save towards something. You first need an emergency savings for when stuff comes up. After that, you can save towards a vacation, a car, Coachella. Whatever. Learning to save really benefits you.
I really hope this helps to put you on the right track if you’ve been needing it. Ask any questions in the comments below!
Thanks for reading!