As a college student, I spent time studying developmental psychology. At the time, adolescence was being increased to a much later age than previous decades. Marked by the millennial generation, my peers were living in adolescence much much longer. (Typically late adolescence now ranges from ages 27-30.) Why does this matter? How does it affect my financial picture?
Well like many of you, I have started my life over and over again. When I graduated from college, my natural next step wasn’t marriage. It was moving to a different city and having an apartment. (No one seems to throw you’re moving registries, do they?) I’ve built a home in multiple spaces over the past decade with one income. Over the past year, I’m been working hard to save for a down payment. There are seasons where saving has been easier than others. There have been other moments that have been more challenging. Quick moves, natural disasters, and additional expenses have dipped into savings more than I would like. With a single income, how do you get ahead? How do you find yourself saving a bit every month regardless of what your income might be? In today’s post I’m sharing everything I’ve learned from my 20s, both in running a business, and in personal finances. It’s time to stop running from numbers and instead choose to start facing them. There’s freedom when we face the truth. For those of you struggling to make it and living above your means or simply are ready for the next step, take 10 minutes and read today’s post.
1. Whether you work full-time or not, make sure you’re putting in full-time hours.
As a business owner, there have been times I wanted to take off, go on adventures, and find myself playing. The remote year, travel, and working from the open road are the pictures many entrepreneurs display on their Instagram feeds and highlight reels. However, can I tell you the truth? Whether you own your business, are working multiple odd jobs, or are just starting out- put in full time hours. Whether you’re working ahead, marketing for more business, generating leads, or solely working to get a new job, make sure you’re putting in at least 40 hours a week. If you’re running a business, I’d argue that it needs to be more like 60+ until you’re booked out.
2. Know your bank balance and use an app to track your spending.
I grew up with an odd relationship with money. Since then I’ve learned the balance for myself and not obsess about it. There are never surprises on my credit card bill and I’ve learned some hard lessons with finances in my 20s (you can read how I went broke and bounced back to 10K in savings here). As a someone who works with multiple clients, I typically have large retainers and sustainable income. I know the amount coming in and my regular expenses. Before the end of the month, sit down and push some numbers. Figure out how much you’re spending where. Where can you make cuts?
How can you get more for less? Here are some practical tips:
Love going out with friends?
Hit up happy hours after work and find meals and drinks at half the price. Get to know the restaurants in your town and see what specials they offer. We have pubs that offer half price burgers on Tuesdays and $3 pints. We have bakeries that offer 1/2 off gelato and cupcakes. Other places offer $2.50 waffles, while cafes offer $2 cappuccinos after 3pm. Movies are $5 on Tuesdays. The dollar theater is always cheap. No specials when you’re eating out? Share with a friend or significant other an entree. (It’s perfect portions for everyone and is kind of cute.)
Love staying on trend with your wardrobe?
Sell items in your closet you no longer wear and use the spare cash for your fall wardrobe. Modify worn jeans you already own with a bit of distressing. (Ways to update your wardrobe for free here.)
Love a great cup of coffee?
Invest in good beans and only go out for specific reasons. For me, it means getting out of the house and allowing an environment to inspire my productivity. Other times it means I’m meeting with a potential client and need a public and neutral space. I schedule my meeting in the mornings when I would naturally want a latte and stay there for a few hours when I’m at the height of my productivity.
Do groceries kill your budget?
Start by going to the store with a plan and stick to your list. Make sure you aren’t shopping hungry. Now look at your cart. Remove extra items. Most processed items can easily made with ingredients you already have on hand. Items like pitas, hummus, tortillas, pizza dough, salsa, granola, and bread can easily be made with items already in your pantry. Looking to reduce your budget further? Good meat (the non-hormone filled and organic stuff) can be incredibly expensive. Start by making one meatless meal a week and see how you can add veggie meals everyone will love. Still stretching your grocery budget? Use things like beans and eggs to add protein to your diet at a reduced cost. Stretch the meat you serve with grains, pastas, or even roasted sweet potatoes.
Have big dreams for your business but a baby budget?
Start by investing 10% back in. That’s right, just 10%. It can grow from there. Think of both short-term and long-term investments. Where can you outsource, trade, or teach yourself to reach some of your goals quickly? How can you increase your profits to invest more? Where will you see an immediate ROI? (We’ll be doing a full post on this soon and dive into the topic a bit further, as it’s one we’re pretty passionate about.)
Love to read books and magazines, but don’t have the cash for more?
Did you know that if you have Amazon Prime, they also offer a Prime library for rent? That’s right your favorite magazines, editorials, and even books can be borrowed at no additional cost. You can also get a library card. (Did you know that library cards also unlock e-books and Lynda.com memberships?) It’s well worth the trip to get a library card and a great way to get to know people in your community as well..
3. Set a monthly budget that is lower than your income.
More than setting a general amount, factor the percentages of your expenses and review what you can truly afford. (Do a one month analysis and you’ll discover that you’re spending far more than you might imagine.)
Below you’ll find my percentages for the month:
25% remaining expenses
25% taxes (including federal, state, and city)
Any additional income or revenue goes towards savings or is invested back into the business.
Now do the math. What can you afford based on these percentages?
For me, I have all my expenses to a precise amount with the exception of my variable expenses. I set a budget for these items.
You can find my monthly budget for variable expenses below:
Coffee Shops $50
Business Expenses $40
Miscellaneous Expenses $40
Total living/variable expenses: $430/month
4. Discover ways to increase your bottom line and decrease your expenses.
The best way to increase your income? Increase the work, services (and possibly even your rates), and types of income you offer. Develop multiple streams of income. Some might be passive while others might be more active. Heading out of town for an extended period of time? Consider renting out a spare room on AirBnb or VRBO. Live by yourself? Get a roommate and cut your expenses in half. Have hobbies you’re great at and people are already asking for? Don’t be afraid to monetize these services rather than offering them for free. You are the one who determines your income ceiling. Consider ways you can increase your income (particularly with the upcoming holiday season).
After reviewing your expenses, there are probably some habits that are glaring at best.
Here are some practical ways to watch your expenses decrease.
- Make your lunch, snacks, and coffee (it will save $$$$ a year.)
- Choose one night a week to eat out. Meal prep or use a subscription food box with online discount codes + referral links.
- Still need groceries but don’t have time to shop? Use Instacart.
- Go on a no-money challenge. Take a week and don’t spend a dime. Get creative.
- Cancel unused and overlapping digital subscriptions
- Bundle with family your Prime membership and streaming services.
- If you have a gym membership, use it. Find a friend at the gym and workout together. It’s implicit accountability.
- What other perks can your Prime membership get you? (Books, magazines, and music at no additional charge.)
- Rewards points and coupons. Join them and use them where you already shop.
- Travel at least once a year? Use a credit card to get miles on your favorite airline and say goodbye to paying for flights. (Love Southwest? Use this link to get a free domestic round trip if you spend $1,000 within the first three months.)
- Get a library card and use it for continuing education. Most include Lynda.com memberships, other e-courses, and e-books.
- Make food from scratch.
- Invite friends over for a night in instead of going out.
- Ditch expensive trips for a road trip and camping underneath the stars instead.
- Use Yelp app for instant offers and coupons on restaurants and services.
What are some of the ways you’ve reduced your expenses?