Do you remember what it was like making the transition from high school to college? If you, like about 40% of public and 60% of private school students, chose to disembark from the comfort and freedom of your parent’s room and live on campus, you certainly remember. Meals were no longer cooked for you around dinner time most every night. The food was probably less healthy, tasted worse, and the money came out of your pocket (either directly if you paid your own way, or indirectly via loans). You were also, of course, paying for your room–and it was probably smaller and more cramped than the one at Mom & Dad’s place.
But, over time, you got accustomed to it. And then, at the end of your four (or five, or six…) years at college, things made a drastic switch once again. Suddenly, you’ve found yourself with a more well-paying job and a little bit more money on your hands. So what’s your first course of action when you get that first paycheck at your new office job? Buy a new car, an expensive new watch, or a few other luxury items you can now afford. Right?
Excessive lifestyle inflation comes almost naturally when you move out of your parents house, get your first job, and live alone. But it doesn’t have to happen at all if you know how to manage your money, your expectations, and your lifestyle.
Spend Responsibly
So you’ve got that first paycheck and, chances are it’s a fair bit higher than anything you’ve received in the past. But just because you have a job making $50,000 now doesn’t mean you can buy a $50,000 sports car or put a huge down payment on a house.
Even with larger checks coming in each week, it’s important to prioritize fiscal responsibility. Your parents aren’t around anymore, but that doesn’t mean you should order Chinese or pizza every night–learn to cook and buy your groceries, you’ll save a ton of money.
In addition, consider buying some items for your house or person used. Rather than spending $500 on a new couch, get a hand me down for a fraction of the cost. The same goes for most anything you need for a new apartment. This, combined with cutting back on unnecessary spending means that you’ll have more money left over from each paycheck.
Plan Ahead
What do you do with the aforementioned money left over from those paychecks? That’s right–put it into your savings account. Saving a little bit from each check and depositing it into your savings account will add up over time–as long as you really, really force yourself to not touch it (except in emergencies).
Budget out your spending–check what you’re spending on rent, on utilities, on a car payment, student loans, and any other regular expenses you may have. Then subtract that and look at what’s left over. Try to put a large chunk of that into your savings every month, but be sure to leave some for a night out every now and then! Just remember, the more you save now, the less you’ll find yourself needing later.
Do Research
One of the biggest money-sinks that people–especially young people–seem to run into is making impulse buys. Yes, that $200 TV on Amazon seems like a great deal–and it probably is, but do you really need it? Take a day or two to think things over and determine how much you actually need that TV before you make a large purchase. The same goes for most any larger purchase, be it a mattress, a car, or which apartment you’ll be renting. See if there are cheaper (but still suiting your needs) options available.
Be Reasonable
It’s one thing to attempt to live within your means, watch your spending and exercise a degree of frugality when it comes to your finances. It’s another thing to go overboard. No one wants to live paycheck to paycheck in their 20s and 30s in an attempt to save up enough money to be buried in a gold-plated casket when you’re 95. Be reasonable, track your spending, plan ahead and do research, but don’t be afraid to spend a little money so that you’re living comfortably when you can.
I’m not miserly. I wouldn’t advocate for you to live life at its most frugal, surviving only on rice and beans so you can save for retirement. You should splurge sometimes. You’ll never get your youth back, so enjoy it while you can. Take a trip every now and then, take your spouse on a nice date or pay for the version of Hulu that comes without ads, but make sure that your spending habits and your earning habits balance out when all is said and done.
