Spending Diet update! You can track how my own savings are progressing here.
The most frustrating thing about trying to save massive amounts of money is the unavoidable fact that you have to spend money to live. It would be so much easier to sock away money from my not-terrible job if I didn’t have to pay for costly but necessary parts of life.
Here’s a list of some of the top money sucks for Twenty-Somethings, and a few tips on how to reduce them:
Creative Commons License photo credit: kevindooley
Rent
For most people this is their biggest living expense. Rent can cost you between 30%-60% of your income, particularly if you live in an expensive area.
There is one really great solution to this- IF you can stomach it. Moving back in with my mom has saved me boatloads of money. It’s not as fun as living independently, but all of that money I would have spent on rent (probably about $1000 a month in this area) now goes directly into savings. Of course this requires willing parents and logistics, but it’s worth giving some serious thought.
If that’s not an option for you, you might consider moving to a cheaper place, or taking on some roommates. A little can go a long way in this department.
Creative Commons License photo credit: twelvizm
Car
Cars are deceptively expensive. Not only do they cost a lot to buy, as an owner you are then stuck paying for pricey auto insurance, gas and repairs (which always seem to come at the worst moment). Saving money would be monumentally easier if I could get rid of my car and solely use public transport for commuting. Or maybe by a bicycle and be richer AND thinner.
Unfortunately for me I have a long commute that is not conducive to public transport, so I’ll be hanging on to my car for a while still. I’m hoping to offset some of the costs of car ownership by selling my pretty black Jetta before I leave. It’s of no use to me while I’m abroad, and I can always buy another car someday.
Creative Commons License photo credit: Andres Rueda
Loans
School debts, car payments and credit car bills seem to bring down many a would-be traveler. As twenty-somethings we haven’t had a ton of time to rack up debt but we are vulnerable to mismanaging what we have.
The only advice I can give here is to pay down as much as you can as soon as possible. Yes it will deplete your savings momentarily, but you will make up for it in the money you WON’T be spending on interest. Adam at Man Versus Debt has some great advice on how to manage your debt and still travel the world.
Entertainment
I asked some of my buddies on #RTWSoon what the biggest savings obstacles were for them and one kept coming up:
thom_sean: FRIENDS! Easy to cut back food/phone/treats but well meaning: ‘oh come on, what difference will ONE night make?’ A LOT
shawnosaurus: Boredom
JohnnyVagabond: That’s an easy one: beer
It’s a tough one for me too. You’re young and awesome; you want to go out with your friends. All of a sudden one drink turns into shots for everybody. You don’t even think about the cost until you get your credit card statement.
Sadly the only way to combat this is that tricky thing called self-control. I do try to remove some temptations by passing on places and events that I know are going to be expensive and capitalizing on free events. I also try to avoid opening a tab at bars (even better: leave your cards at home and stick only to the cash on your person).
I know some of these measures seem drastic. But the truth of the matter is that if you are trying to massively change your life your going to have to make some sacrifices. There is no easy fix just hard work. Hopefully the end goal makes it all worthwhile.
Your turn: any major expenses I missed? How do you drastically cut down?
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Money or lack there of is sooooo painful!!! Entertainment is the major killer for me, I’ve had to stop eating out and instead go for just coffee and share a large slice of cake! It helps having poor friends too!!! Somehow I’ve managed to curb my shopping habit most likely only because I’m going to China and i realised everything comes from their anyway and it’s cheaper there. Oh and public transport is my life saver, of course i only live in a small City so it doesn’t take very long to get anywhere and if i can walk somewhere instead i will.
Sasha´s last blog ..On UR Way Magazine Issue #1
Yes I cut out shopping cold turkey last month. So far it hasn’t been too bad- mostly because everything for sale now is winter clothes which I won’t need for a couple of years. Once the pretty summer stuff comes out though I’m going to be in trouble…
Restaurants – it’s amazing how much you can save by having a quiet meal at home instead of spending out on the town. Even a basic pizza place can cost you $20 instead of the couple bucks for a sandwich.
Very true, one of my personal challenges is to pack my lunch for work instead of buying it 80% of the time. Life is so hard when you are lazy and can’t cook…
Student loans are KILLER. Your advice is the best: Pay it off as soon as you can, and you’ll save yourself tons of money in interest. Otherwise, you’ll still be paying off your loans when you’re in your 40s, and that’s no fun at all. I paid mine off in about 5 years. It was a lot of sacrifice, but it was worth it, because then I could start saving money for what I wanted.
Remember, you can still get together with your friends without going out. Go to someone’s apartment for beer and movie night. It’s cheaper than going out somewhere.
Gray´s last blog ..Interview with a Solo Traveler, Part II: Advice for Going Solo
oh good I’m glad you agree about the loans. It’s such a bummer to start out your new life in deep debt (espeially if you went to a ritzy private school like me). It’s important to tackle that debt right away instead of trying to act like it’s not there.
Free events are a big money saver for me. Luckily there are a lot of decent options in Boston, and my guess is you’ve got even more options in DC.
I’m still guilty of buying lunch at work, though I am getting better at bringing my own. I think most of my money goes toward food.
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I definitely need to be better about finding the free events. You are right there are TONS in DC but I get so lazy about looking for them.
I wish I had used this website more when I was in DC last semester!
http://washington.org/visiting/browse-dc/attractions/100-free-things-to-do
Great suggestions! I was just thinking about my expenses and savings for my senior year so I can travel after graduation (looking into some kind of travel/work thing abroad). Saving is so hard but for me it’s about planning a couple of “events” you want to do each month (or semester) and budgeting around those. I do want to start utilizing the buses in my town though they are getting more widespread and convenient!
And yea, food is probably the biggest killer of my budget. And all of those little things that I think I need/want.
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oooh thanks for the link!
I always had such a hard time saving in college (of course I didn’t have much money to save back then). It’s good that you are motivated!
For me I always find using debit and credit cards misleading. It feels like I’m not spending anything by using them, until I get my bank/credit card statement and see a depletion of funds. So I’ve started using cash to pay for things, it makes it easier to see how much money I spend when its physically there in front of me. I’ve even put a note in my wallet ‘do I really need this?’ it sounds cheesy but it helps me stop spending when I feel like splurging on something stupid.
And phones. I know some people who have home and cell phones, but only use one of the two. Personally I just have a cell and I’m not much of a phone person, so I have a pay as you go virgin mobile plan. I just buy $100 phone card and it’s good for a year. It normally takes me 8-12 months to use one up. Of course not everyone would be able to do this, but it’s not a problem for me.
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Hi Alouise. I totally agree with you about the cash versus credit issue. I’ve actually stopped using my credit card altogether lately (except for really big purchases), forcing myself to stick to the amount in my checking account. When I go out I try to operate solely on a cash basis. I think it helps.
Oh how we all wish we could win the lotto and travel forever *sigh*
I moved in with family to cut my rent and bills down, living solo is just non a travel friendly setting.
Next was to cut down on movies, restaurants, and other non-essential outings.
Bringing your lunch to work is an easy way to save $50 bucks a week. When you buy lunch you normally grab some food a drink and oh doesn’t that chocolate bar or muffin look good too.
The gym is great but going for a run around the block can be just as beneficial so can the cost and get outside (I realize this works better for me in australia what with our summer and the sun and all)
I’ll be selling my car shortly to wipe off the money owed on it. As you said Steph can always get a new car.
Other items I reviewed 12 months ago were insurance policy’s etc you should do this every so often to ensure your getting the best deal. You may find you can save more money here.
There were other things I have done but can’t remember at the moment.
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Those are all really great suggestions Christ! I’m glad I’m not the only one on the “move in with the folks” band wagon.
I actually wrote a post that covers a few of these, called Five Things You Can Lose To Make Travel Easier: http://www.driftingfocus.com/blogs/?p=5874
Kelsey´s last blog ..One Blog, Two Blogs: To Split or Not To Split?
I had to pay off my student loan in order to travel but I think one of the biggest money suckers is lunch. If you work and are too lazy to make your lunch you end up spending a ridiculous amount of money on something that isn’t as fun as going out. Once I decided to start saving for my trip I allowed myself one day a week to buy lunch, otherwise I had to make it.
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I do the exact same thing!
i have to agree with entertainment. it’s not too bad saving…except you need to keep your sanity at a reasonable level. that’s when i end up spending money for those city trips to hang out with friends…next thing you know, 100-200 out of the pocket…ouch!
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yeah those are killer too. I love visiting my friends in New York, Atlanta etc. Unfortunatly it’s just not in the budget right now.
I LOLed at being “young and awesome”
Going out for entertainment is a huge money vortex, you’re right. I’m not doing too bad, but many of my friends are on strict budgets (yay for graduating in this ecomony…) so we’ve taken on the habit of meeting at home instead of going out. Like packing your lunch, you can save tons of money by preparing dinner and mixing your own drinks – you can even get higher quality stuff for lower prices, healthier foods and fancier beers… And you’d be surprised by the number of closeded entertainers out there, who’ve been dying to show off their skills at arranging appetizers on a plate!
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Yeah everyone is pretty poor these days which makes it a lot easier to be thrifty. We’ve been trying to do “Game nights” lately with beer and board games. Easy, cheap and fun!
I swear, sometimes I’m actually glad I don’t have much of a social life. I realized today that I’ve spent less than $120 on things other than groceries/household expenses since November. How do I know this? I realized today that my debit card expired in November. Marc and I have a joint account for our household stuff with its own card, so my debit card is only for personal purchases (going out, coffee, music, etc). I got $120 in tips in December, and there’s still some cash in my wallet, and my debit card expired in November, so…yeah, I’ve spent less than $120 in about 3 months.
Kelsey´s last blog ..One Blog, Two Blogs: To Split or Not To Split?
not bad at all!
I think I would have to agree with JohnnyVagabond on the entertainment aspect. I can do good up until I go out to buy some drinks, but I counter that by drinking whatever is the special or buying a pitcher. Plus if your with a group of friends you can buy one pitcher and a friend gets the next – it’s a good system.
The rent is my biggest expense, I could find a place that would save me around $100-$200 less a month but I’d stick myself in an apt complex. I chalk that one as the cost of happiness which is worth it while I’m stuck in one spot.
Cornelius Aesop´s last blog ..Loans Will Be the Debt of Me
Yeah, its important not to sacrifice your sanity with all the savings. Good to cut back but certainly want to keep life bearable (monkeyable?)!
I am SO glad you pointed me to Man vs Debt! So so glad! Exactly the info I need. I do pretty much everything you identified in this post. I won’t give up entertainment though, I usually go out once a week but the most I’ll spend is $30. Roommates are DEFINITELY a good choice, as is having a “cash only” policy.
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oh yay! happy I could help. I really like Adam’s blog, its very encouraging!
Definitely food. Lunch in the city is so expensive. It’s about $7-8 per meal and that adds up over a month. It’s almost $200 a month, $2,400 a year!
wow, that’s an illustration of how little things can really add up!
Cash only on nights out helps a lot, also having friends who insist on getting the rounds in once they are trolleyed.
Another one I’d add to the list is hobbies. I used to be into cars, and I can tell you changing an engine is not quite as cheap as the price of the engine… Video games were much better, but 2nd hand, complete, sell. Almost worked out to be free if you are clever, and definitely cheaper then renting.
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hobbies can be quit costly. Lucky for me blogging is my hobby. It’s relatively cheap and steals my social life- so maybe it actually saves me money!
Another great reason to travel. You learn how to make a budget and (more importantly) how to stick to it.
When we started travelling we were forced to learn all this, and it’s pretty useful to know even when you’re back home again.
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Travel can teach you so many life lessons!
Booze, booze, booze. If I didn’t drink I’d have a lot more money in my pockets.
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Agreed.
Entertainment’s the hardest thing to cut out. My husband and I started conserving money last year by cooking a lot more and having more nights in. Game nights with grocery-store beer are key.
I am pretty sure my life would be 1000 times easier/healthier/cheaper if I would just learn to cook.
boozes, parties ‘n dine out are the keys. once you cut on these dramatically, you will realise were all your wage has gone lately. lunch boxes, healthy dinners at home with no readymeal and a bicycle to move around (in city like london was great) will make you surely richer and thinner (love that steph
). moving back with parents could be surely a shock, better sharing a flat with some mates.
For the girls i would add avoiding to go shopping!even when the sales are on you would buy much more than you actually need it, remember after all you will travel with a backpack of 10kg and barely few clothes so resist the temptation!
Yup I’ve been avoiding the mall and, even more treacherous, the online shopping! I used to sign up for all the sale alerts- now i delete them with out opening. Better to just not even think about the temptation.
Marta, you’re right.
I remember spending so much money when I was partying back in the day (easily spend $60-80 a night, and if you go out two nights of the weekend, that’s almost $160 A WEEK!)
Geebus, a month of that and you’ve got a discounted flight somewhere already.
Another big money suck is just the regular ol’ living expenses of living in a city (rent etc)– I found traveling abroad was actually much cheaper than city living. For 2 and a half months in India, I spent $250 and ate like a queen too.
youngandthrifty´s last blog ..Carnival of the Young and Thrifty: Edition #2
I was really proud of myself, aside from metro fare I managed to spend $0 this weekend! house parties helped, as did convincing other people to buy me drinks. Basically I’m a huge mooch now.
Definitely food, rental is fixed, you really don’t have to worry about controlling it, you just have to allot for the rental expense. But food, if you don’t know how to cook and don’t like packing-up lunch, then you will never notice where your money is going. Include the latte you have after office or the late night out.
Yup, food is killer for me as I’m disaster in the kitchen.
Terrible advice. I can’t think of anything nice to say, so I will just leave it at that.
Thanks for the (not at all constructive) criticism!