Monthly Archives: April 2017

Tips To Start Saving

Americans aren’t great at saving. In an oft-cited statistic, almost half of Americans (46 percent) report that they wouldn’t be able to handle an unexpected $400 expense and would have to go into debt to pay it. Another 21 percent reported that they’d deal with three months of unemployment by borrowing from friends, selling assets, or taking out payday loans.
At Money Under 30, we feel that the emergency fund is the bedrock of financial security. It allows you to weather unexpected hardships without raiding your retirement funds or other investments, which means you don’t miss out on gains or pay unnecessary fees. It gives you a sense of comfort and confidence that you can face any challenge.
All that said,  saving is hard. It requires you to fight against cultural conditioning (in the form of ads, TV, and your friends on Facebook) that tells you you should spend, spend, spend, and acquire all that you can. It requires you to forgo immediate pleasures for the sake of far-off calamities.
We all know we should be saving—people regularly list it as one of their top financial resolutions each year—and yet so many of us don’t. There’s a reason for that.
Here’s how to start saving—by first acknowledging why it’s hard.
Why it’s so hard to start saving

When you first start putting away money, it can feel so insubstantial as to be meaningless. You’ve got, what? Fifty bucks in your brand-new savings account? It’s a start, but it’s far from where you want to be. Your goals and dreams can seem so far away as be unreachable.
By saving rather than spending that money, you’re also giving up something. It can feel like an unfair trade. After all, that $50 in your savings account won’t help all that much if you’re suddenly hit with a $500 expense; it’s also not gonna get you to Vegas for your buddy’s bachelor party. (Unless you already live in Vegas.) And, by tucking it away in your savings account, you’re not getting the sweater/video game/daily frappuccino that you would have normally spent that $50 on.
It’s easy to weigh the pros and cons, say “screw it,” and take that money and buy what you want, enjoy the immediate gratification, and then later beat yourself up for not having the willpower to save. And to do it all again with your next savings attempt.  Lather, rinse, repeat.
Soon enough, you’ve resigned yourself to a life as a non-saver, living paycheck to paycheck, frittering away the future on a few frivolous pleasures.
But it doesn’t have to be this way. With a few tricks, and the right mindset, you can start building up cash reserves that’ll help you weather any storm.

1. Keep your savings out of sight

The absolute first thing to do is set up an external saving account. You need to put up some barriers between you and your reserve cash.
If you just transfer money to a savings account at the same bank where you have your checking account, then it’s too easy to transfer it back and spend it. (At my bank, it’s literally instantaneous.) The separation between a checking and a savings account at the same bank is practically nil.
An account at a different bank erects hoops you’ll have to jump through if you want to spend your savings. And, if you’re anything like me, that effort will be too much, and you’ll opt to keep your money where it is and not buy whatever shiny toy has caught your fancy. As an added bonus, you’ll avoid buyer’s remorse.
A separate high-yield savings account can also offer you significantly better interest than your run-of-the-mill savings account. That interest is still likely to be a piddling 1 percent, but as your balance grows, so will the interest you get, which can be a motivator in its own way. (Free money is free money, even if it’s $2 a month.)

2. Focus on the process rather than the ultimate goal

This, of course, is the opposite of what most personal finance blogs say to do. They’re all about final goals! If you’re saving for a vacation, they tell you to put a picture of a sandy beach in your wallet, or to imagine the surf tickling your feet whenever you want to spend money on a mindless purchase. Visualize what you want, the theory goes, and your will won’t fail you.
And that probably works great for saving for fun stuff. Concrete stuff. Things like access to sandy beaches or a bright new iPhone. But it works less well for what might be the most important savings goal of all: Your emergency fund. I guess you could put images of scary car accidents or large medical bills into your wallet, but that’s no way to live.
Instead focus on the process, on simply doing the thing that needs to be done, and reward yourself (in some small way) for keeping up with it. Perhaps tell yourself that you’ll only do it for a certain amount of time, like three months. Then the sacrifice won’t feel so great, the commitment less permanent. By the time the three months are up, you’ll be in a groove and won’t want to stop.

3. Don’t set yourself up to fail

Where most of us go astray when it comes to resolutions—whether financial, professional, or otherwise—is by setting goals so lofty they might as well be impossible.
For instance, if you decide you want to lose 50 pounds in the next year, you’re going to feel crappy if exercising and not eating delicious cake doesn’t yield results immediately. You might even be tempted to quit. (After all, you gave up cake and have gotten nothing for it!) But a lack of major results doesn’t mean you’re failing—after all, there are so many factors that go into weight gain or loss—not just exercise and diet, but genetics and other things outside your control.
Instead, if you say you want to bike to work three days a week and eat a salad for lunch every Friday, then that’s a lot more manageable. It’s specific, but allows for some wiggle room. (Some days it rains, after all.) And exercising, whether for weight loss or other goals, usually makes you feel better. You’ll feel good and you won’t get frustrated when you don’t immediately drop three inches from your waist, because that’s not what you set out to do. You focused on process, not results. The means, not the ends.
The same goes for money goals. If you say you want to save $10,000 in the next year, you may find yourself frustrated by slow progress or an unexpected setback, and just give up. But if you just say you want to save X amount each paycheck, then you’re going to be more likely to succeed.
And that success will give you motivation and momentum to keep going, so that you’ll be more likely to hit that lofty original goal. If you bike to work, it’s possible you’ll start shedding fat, gaining muscle, and feeling more energetic. If you put $100 aside every paycheck, soon you’ll have a substantial sum.

4. Take advantages of windfalls to help build savings momentum

Nothing gets you more stoked about savings than seeing your balance go up—way up.
If you’re putting away $50 a paycheck, it’s gonna take a little while to build up some serious cash. (And that’s okay!) However, if you find yourself with a nice year-end bonus, or an unexpectedly large tax refund, or even some birthday money from Mom and Dad, you can make major progress in no time at all.
Your first instinct, of course, is to spend that money, guilt-free. And that’s one option. But by putting that money (or most of it, anyway) into savings, you’re getting closer to that moment when you’ve saved up enough that you feel invested, when you no longer look at your balance as some piddling nothing, but rather as something to be protected and cultivated. (If there’s one thing that regular savings teaches you, it’s that it takes a long time to save up a substantial sum, and no time at all to spend it.)
Once you hit that place, then saving becomes a lot easier. It stops being drudgery, and starts being something you want to do. You experience, for maybe the first time, what financial security feels like. And it feels good, so you’ll want to get more of it.

5. Get a side hustle

I know, I know. We’re always talking about side hustles around here. But there’s a good reason for that.
It can feel truly empowering to get paid for something outside your biweekly paycheck—especially if you’re trapped in a dead-end job or something you’re not passionate about. And since your budget is based on expected income (for us wage-slave drones, at least), that money (minus self-employment taxes) can go to anything you want, including your savings. It’s all gain, baby!
I made major strides in my savings goals over the last year by putting almost all my freelance money towards my emergency fund. Because of this, I’m likely to get it fully funded more than a year earlier than I would have if I had just been making my regular deposits from my biweekly paycheck.
Making those extra deposits—and seeing my balance go up by leaps and bounds, rather than dribs and drabs—makes me more motivated to save, and more motivated to seek out new freelance projects.

Some Important Money Lessons

Hands down, my dad is one of the most frugal people you will ever meet. Now, don’t get me wrong, this 6’4” gentle giant is by no means cheap. But frugal on the other hand, well, this two-syllable word should have been his middle name. While many members of our family tree have constantly joked about his level of frugality — myself included — it wasn’t until I entered into the world of adulthood a few years ago when his financial wisdom deeply resonated. Because let’s face it: “adulting” is hard and confusing. Not to mention expensive!

It’s because of my dad, and the countless hours he spent teaching and ingraining lessons about money in my mind, that I was able to step through the threshold of the much-anticipated “real world” with confidence. It’s because of him that I learned money doesn’t have to be scary or controlling. And it’s because of him that I am excited to be sharing the five most important money lessons he taught me with you. Because all these lessons are universal, I hope to pass along his wisdom and shed a light on how everyone can become financially healthier, all thanks to the good ole friend of frugality.

1. Expect the unexpected.

I’ve lost track of how many times my dad has preached the “expect the unexpected” sermon to me, but I do know one thing for certain — this lesson will forever be carved in my mind. Whether my car breaks down, I need an unanticipated surgery, I lose my job, or I’m just down on my luck, whatever the challenging issue might be, it is crucial to have an emergency fund.

Having this financial cushion not only puts my mind at ease it also acts as a blanket of comfort knowing I don’t have to rely on anyone else in any unforeseen situation, as I have my own resources.

2. Forget “keeping up with the Joneses.” Always live within your means.

Looking back, my dad was very adamant about teaching me the importance of living within my means. While credit cards can be beneficial for building credit, we would have regular conversations about the dangers that could very easily come along with credit card love affairs, as well as by trying to keep up with others’ spending habits. As he always stated, “Just because your friends have the latest gadget or “it” device, doesn’t mean you automatically need it.”

He emphasized the importance of tracking what comes in vs. what goes out. By knowing exactly what’s coming into my bank account each month, and creating a list of all my fixed expenses — for instance: rent, car payments, insurance, electricity, the list goes on! — the lines of living within my means aren’t so blurry, as I am then aware of the amount I have left to spend.

3. Planning for retirement doesn’t have to be nerve-racking.

Whenever the word “retirement” enters the room, nerves start tangling and stress levels begin to rise. And with good reason. It’s a chapter of our lives we all know we should be saving for, but with it being 30-plus years away, what’s the rush, right? And how do we even begin? Yes, even the idea of saving for retirement can feel daunting. But the truth is, it doesn’t have to be…If we start the process now.

When my dad first sat me down to talk about 401k accounts and Roth IRAs, the words coming out of his mouth sounded like a foreign language. Yet over time, I began to catch on. I realized the magic time can have on money and the beauty of compound interest. Therefore, it’s not so much about the amount you’re investing into your retirement at this given moment. Instead, the importance lies in ensuring you’re adding something to your account and making consistent contributions. Remember, even the smallestefforts can make a drastic difference down the line.

4. Start saving today for your dreams tomorrow.

Growing up, my family loved to go on camping trips together. Seeing and exploring new places was our jam. So when my travel itch extended into wanting to sign up for an international trip with my high school, my dad thought this would be the perfect opportunity to teach me the importance of saving. He and my mom made a deal with me that they would pay for half the trip, but I would have to come up with the rest of the money.

After a summer of endless hours spent babysitting, mowing yards, washing cars, and any other chores I could scrounge up, I met my savings goal. And oh, how sweet that moment tasted knowing I had achieved my dream on my own! Not only was I able to embark on my first international experience, but it was during that time I also learned the true value of a dollar. I learned by taking the time to plan out tactical steps, I could break down any goal into something manageable. Most importantly, I learned with hard work, patience, and discipline, I could accomplish any long-term savings goal — even ones that seemed a little too far out of reach.

5. Be your own Prince Charming.

As a father of three daughters, my dad was determined to teach us the importance of being financially independent. While he always hoped we would one day find our “Prince Charming” in life, the last thing he wanted for us was to rely on that person to rescue us from any financial woes.

To balance the encouragement of us going after our dreams, and living the life we’ve always imagined, my dad taught us early on the importance of understanding finances. Whether or not we met someone to share our futures with, his focus was to ensure we would be well-equipped with the knowledge to take control of our financial future. For that, I will forever be grateful.

Thank you, dad. Thank you for sharing your wisdom. And thank you for instilling so many of your financial habits in me. It is because of you that I value financial responsibility. It is because of you that I choose —and always will choose — peace, love, and frugality.

Trick Yourself Into Saving More And Spending Less

You know that if you do enough abdominal crunches and jumping jacks, your stomach will get stronger and you’ll lose some weight.
According to psychology experts, the mind is just another muscle that works the same way. If you exercise the brain, you can strengthen your financial health, and lose some of that money-related anxiety.
We asked Ryan T. Howell, Ph.D, an Associate Professor in the Psychology Department at San Francisco State University and co-founder of Beyond the Purchase, a think tank about how and why people spend money, to explain how you can use the power of the mind to trick yourself into buying less, paying down debt, and saving more.
Post visual reminders of your financial goals in strategic spots

Saving for something big, like a vacation? Or trying to get your credit card balance down to zero?
Place a visual reminder in places you look at a lot.
For example, print out a picture of your next ideal vacation destination, and wrap it around your debit card, or change the background photo on your cell phone.
If you’re a big online shopper, but want to wipe out your credit card debt, change the background image on your computer screen to a big fat zero.
“This helps take the emotional excitement out of buying and makes it a deliberative, cognitive process,” Ryan says.
Find a cheaper phone plan

Many of us spend a lot more money than we need to on our phone plans. There are many alternatives to high-price, big-name phone carriers—take FreedomPop for example.
Let’s compare FreedomPop’s most popular plan of unlimited text, talk, & 2GB of data, at the cost of $24.99 (after the free one-month trial!) to Verizon, AT&T and Sprint. For this same plan, Verizon charges you $40, AT&T charges you $50, and Sprint opts for a 3GB plan instead of two at $50.
You might be saying, well FreedomPop must have spotty coverage or charge way too much to purchase a new phone—there’s got to be a catch. Well, you’d be wrong.
FreedomPop gets their coverage through Sprint, so anywhere your Sprint phone works, so will FreedomPop. And compared to Verizon, FreedomPop works just as well in inconsistent coverage areas like Maine.
FreedomPop also offers a much more financially accessible phone purchase. The Moto E 2nd Gen LTE Android phone is just $29.99 compared to the hundreds you could spend on a phone elsewhere.
FreedomPop’s 2GB plan is for someone who spends a good amount of time looking at their phone. If you’re a more casual phone user, FreedomPop can offer you a plan that’s free. Yes, free. You can get 200 minutes for talk, 500 texts, and 500MB of data each month at no cost to you.
When considering which phone plan to use, make sure to think about what you really need and make sure to choose a plan that doesn’t charge you for what you aren’t using.
Stick with budgeting tools and apps, even when they make you feel bad

You downloaded an app like Spending Tracker or finally linked up all your accounts with one of our recommending budgeting tools.
Feels good to take control of your finances, right?
Yes—for awhile.
Don’t be surprised if you start to feel depressed once you start actually entering numbers about purchases, or seeing—in those neat, colored Mint graphs—how far off your budget you went.
“These tools have made it so simple and easy to track money,” Ryan says. “But knowledge can be painful. It’s unenjoyable to know you’re not doing well at something.”
But stick with it, Ryan advises. “It’s like exercise,” he says. “At first, it’s painful. But then you begin to enjoy it, or at least realize the uncomfortableness is worth it. Realizing you spend too much money isn’t fun, but the pain that comes with massive credit card debt is worse.”
There’s also an easy way to save money similar to budgeting apps, but that does the work for you.
Chances are you have a couple of subscriptions out there that you quickly signed up for, but forgot about haven’t had the chance to cancel. Maybe it’s your gym membership, or that freelance site you no longer need because you’re full-up on jobs.
Either way, Trim, a free financial service, will find and cancel these subscriptions for you. All you have to do is link your bank and credit card info to their service (don’t worry, they only load the transactions related to subscriptions). They then send you a text message with all your subscriptions (Netflix, Hulu, your gym, etc.) and you can cancel them by replying with “Cancel [insert subscriptions here].”
Don’t purchase upgrades

Retailers offer upgrades for almost everything these days. But in most cases, the upgrade isn’t worth the cost.
“Think about a concert or a baseball game,” Ryan says. “Is there really a difference between nosebleeds and ten rows in front of the nosebleeds? Unless you’re paying for an upgrade that will get you behind the dugouts or in the tenth row, don’t buy the upgrade.”
Wait 24 hours to buy any unnecessary items

Avoid engaging in retail therapy.
“If you’re wandering through a mall aimlessly, and you’re feeling bad about your career or something else, and you see a shiny new phone, you might think, ‘That will make me happy,’” he says.
But studies show the joy that comes with a new purchase usually disappears. All you’re left with is the debt from these purchases, or less money to put in savings. The less money you have, the more stressed you’ll be.
But sometimes you do need a new phone, or new clothing. So when is it OK to make these purchases? When you take 24 hours to think it over.
“After 24 hours, you’re probably not making an emotional purchase,” Ryan says. “You either really want it, or you’ve decided the purchase will truly bring you closer to family and friends.”
When shopping or eating out, if the total is less than $100, use cash

The last time I visited an ATM was over two weeks ago, when I took out $100. It’s a pain for me to get to an ATM, especially in cold weather. Now that I can deposit checks through Chase’s mobile app, I have even less of a reason go to an actual bank.
I just checked my wallet, and I still have $80 there (my husband swiped $20).
Now I’ve certainly spent money since then—I just always pay with my debit card at stores and restaurants.
Even though I know I have cash in my wallet when I’m paying a bill, I’m reluctant to use it. I keep telling myself I may need it in the case of an emergency (although when I think about it, I’m not sure how cash would really help me) or if I go to a cash-only restaurant. But when I think about it, that’s ridiculous. I can just stop being so lazy and go to ATMs more.
According to Ryan, your brain will send out a lot of “don’t do it” signals when you know you only have cash in your pocket. “Research shows there’s pain in paying with cash,” he says. “You really understand how much you’re parting with when you use cash. You don’t have that same experience with plastic.”
You probably shouldn’t carry around loads of cash. After all, wallets are sometimes lost or stolen. But Ryan thinks carrying around $100, and using that to pay totals and tabs will pay off in the long run