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How to Save Money in Your 20s

07.13.2020 by admin // 6 Comments

Saving money in your 20s will help you achieve financial stability. A lot of people in their 20s are dealing with student loan debt and aspiration for days of having a strong financial cushion and achieving their dream lifestyle. While it’s easy to think that financial planning may be pointless at this stage, the baby steps taken now will create a financial foundation. Increasing your income is most important, but spending less than you make is a close second. Increase your income, be smart with your spending, save money and invest are the recipe for success. Here are tips on how to save money in your 20s to set the stage for a strong financial future.

Increase Your Income

It’s not about what you make, it’s about what you spend is true. However, it’s a lot easier to save money when you make more money. Your lifetime earnings are decided in the first decade of your career. As a result, increasing your income in your 20s is especially important.

There are several ways to increase your income. First, hustle at your job and create a plan to double or triple your salary. This plan may include strategic networking to get promoted or switch industries, identifying what you need to do advance your career, get another degree and / or expand your skill set. Second, build additional streams of income. In order to begin generating passive income, you need to have money first. To build wealth quicker, start a side hustle in addition to your day job. As your income increases, keep your spending flat. This will allow you to save even more money in your 20s.

Save Money In Your 20s by Being Frugal

Now that you’ve focused on making more money, how do you avoid spending your entire paycheck? Control your expenses. Do you make more money than your friends? Doesn’t matter, spend as if you make less. Consistent saving and investing, especially in your 20s, can be an effective way to accumulate wealth. The more you save in your 20s, the less you have to save later in life due to compounding. See how even small savings amounts can add up over time with this compounding interest calculator.

In your 20s, this means being frugal for a few years. You don’t have to be frugal forever. The longer you’re able to live frugally like you lived in college the easier your finances will be. Being frugal also doesn’t mean never having fun. You don’t have to cut back in all areas either, the single most important expense is housing.

Save Money On Housing And Live with Roommates

Some of the best ways to save money in your 20s include being smart with housing. Housing is likely the largest expense in your 20s. Once you sign a lease, you’re stuck with that expense until your lease ends. Don’t become “house poor.” Experts say housing should be no more than 30% of your gross income and that includes all housing expenses. However, this doesn’t mean you should spend 30% of your gross income. The less you spend on housing the more money you’ll have available to save, pay down debt and spend on other things you enjoy. Want to live in a certain location? You may have to settle on the amenities and living with roommates.

The most sure way to save money on housing is to live with roommates. Not only are you able to spend less per month on rent, you’re also able to split utility bills, and split buying the furniture. It’s expensive to furnish your first place. Splitting these costs will save you a ton of money the first few years and enable you to start building a savings cushion. Bringing your own lunch can save $7 / day or $140 / month. Being smart with your housing can save you hundreds a month and thousands a year.

Buy A Used Car or Skip The Car Altogether

The next biggest cost you’ll likely have is transportation. Sometimes, a car is unavoidable. You need it to get to your job and back. But, with remote working increasing, public transportation and rideshares becoming more available can you skip the car for a year or two for a little inconvenience?

Before you buy a car, do the math. Can you use public transportation, bikes and ride shares? How much will this cost you per month? Then, compare this to how much it’ll cost you to own a car. Don’t forget, the money you spend on a car could have been invested and earning you more money or paying down debt. Car expenses also include maintenance, gas, parking, insurance and depreciation. If you can, skip the car. If not, spend as little as you can on a car in your 20s. You can always get a nicer car when you have more money.

Save Money on Food and Drinks

There are ways save money on food and drink and still have fun. You can still go to restaurants and bars and save money in your 20s. Take advantage of happy hour specials. Go over a friends house and have a drink before heading to the bar. When you get to the bar, limit yourself to one drink. Invite people over to watch sports instead of going to a bar. Take advantage when there is free food at events. Bring your lunch. Set a monthly budget for eating out and going to bars. There are plenty of ways to continue to enjoy eating out and also save money.

Eat at home for all other meals and bring your lunch. Planning your meals and using coupons on groceries will save money. Don’t order takeout and instead save your eating out money for when you go out with friends.

Limiting spending on food and drinks is a great money move in your 20s because it starts developing discipline around spending money. It’s hard to say no to always going out with friends and spending money on food and drink but it adds up. But, this is small amounts of money compared to later on. If you can’t say no to going out to save money, how are you going to do when you’re invited on $1,000+ vacations? Practice saving money here and the discipline will spill over to other areas.

Be Frugal With Your Vacation Spending

The best time to travel is in your 20s when you have less responsibilities and more time. This is also when you have the least amount of money so how do you best balance this? Save money in your 20s by taking road trips. Rent a house with friends to reduce spending on lodging. Split a hotel room with 3 other friends to reduce costs even more. There are also plenty of ways to save money on travel, you don’t have to give up travel entirely.

Another option? Work for a global company and take advantage of traveling for your job. It’s much cheaper to spend 2 extra nights in Europe when you’re flying there for work than paying for an entire Europe trip. At minimum, sign up for every single travel loyalty program. This way, you can accumulate points to use for free nights, free airfare and free car rental days. You can also get a good rewards credit card and redeem for free travel.

Limit Spending on Clothing

When you first graduate college you will need to spend some money on clothing. Your college wardrobe won’t suffice for a professional wardrobe, attending weddings, etc. Spending money on clothes in unavoidable. You can continue wearing free t-shirts for a while at home, at the gym and on weekends but at some point you will want to upgrade there too. When you do spend money on clothing, take advantage of sales. Also take advantage of shopping second hand like on Poshmark and even sharing clothes with your roommates if you can. To start to build a wardrobe, buy 1-2 nice things a year like a good pair of black heels and a nice leather black tote.

Take Advantage of Company Benefits

Salary is important, but don’t forget about job benefits. Job benefits include vacation time, health insurance and 401(k) match benefits but did you know there may be more benefits to help you save money? In college you were able to get discounts with your college ID. Post college, look for ways to use your company ID to save money. Some health insurance plans offer money towards a gym membership every year. Depending on the industry and area, companies may offer free or discounted food, free gyms on-site, discounts on auto insurance, discounts on personal travel and more. Look at your internal company site to learn more about perks offered by your company.

Track, Manage and Reduce Your Spending

Now that you have those saving money tips, know how you are spending your money today. Can you use any of the tips above to save money? You must spend less than you make in order to save money in your 20s. To do this, you need to understand where you’re spending your money. When you just graduate, you’re adding a lot of new expenses. For the first few months, track every expense and see where you’re spending your money. Don’t change any behaviors, only add tracking what you spend and follow how you normally spend your money. At the end of the month look back at what you spent your money on. Do the same for the following month. Are you spending more or less money than you are making? Were all those purchases necessary? How did your spending change month to month?

Create a Budget

Saving money in your 20s starts with having a budget. Create a budget that works for you and isn’t too restrictive, otherwise you’re less likely to follow it. There are plenty of apps like Mint which make this process much easier. First, input your regular bills like rent, electricity, internet, etc. These are all of the bills you must pay. There may be ways to decrease these bills later, but for now put what you pay today. Set aside money for the things that bring you happiness and finally add in everything else. Be realistic too – you’ll need clothes and you’ll be invited to a lot of weddings in your 20s.

It’s ok if your budget is imbalanced when you first add everything together. Budgets take multiple iterations to get right. Keep shifting around numbers until you’re able to balance your budget. If you find that no matter how much shifting you can’t find ways to save money with your current income though then you need to start looking at ways to make more money.

Set a Savings Goal and a Retirement Savings Goal

You want to save money in your 20s, but how much? Give yourself a goal for how much you money you want to save per month. It doesn’t have to be a high number – you can start with even $5 a paycheck and increase it. Use this money to start building your emergency fund, so if any emergencies arise you have cash to cover it. You can find a calculator here to help identify how big your emergency fund should be. And, don’t forget to save enough money for retirement to get your employer match if they offer it at minimum. This graph from Business Insider shows the difference of saving $100 / month for retirement starting at 25 verse 35. The person who started at 25 ends up saving $73,000 more by age 65 solely by starting 10 years earlier. Only $12,000 of that difference is additional contributions, $61,000 is from compounding interest.

One trick to avoid cutting spending is to move more of your saving towards your 401(k) contributions. 401(k) contributions are pre-tax, so you’ll reduce the amount of taxes you owe in your budget. Once you’ve identified how much money you want to save, or can save, automate it! One of my favorite money saving hacks is to automate your savings. Take these steps to automate your savings and watch your savings grow.

Where Do You Put the Money You’ve Saved?

Where should you put the money you’ve saved? Money saved in your 20s should first be held in a high yield savings account as part of an emergency fund. Unfortunately, there have been interest rate cuts across the board including high yield savings accounts, so you won’t make much money here. But, it is better than nothing. Nerd Wallet shares here the top 10 best high yield savings accounts. You can also look for banks offering sign up bonuses.

See Also: How To Invest Money In Your 20s

How to Save Money in Your 20s Summary

How to save money in your 20s can be summed up in a few simple steps. Increase your income and keep your spending flat, saving the difference. Be frugal for a few years. This includes living with roommates and spending as little as possible on transportation. For all other expenses prioritize what brings you happiness and cut back spending in other areas. Set a savings goal and stick to it. Yes, saving money in your 20s is harder than saving money in your 30s. Your salary is lower and you don’t own much yet, increasing your initial expenses. But, your lifestyle expectations are also the lowest. The more you can save when you’re young the easier it is as that savings will continue to generate passive income for you. Set yourself up for success by saving money in your 20s.

Here are more smart money moves to make in your 20s.

10 Pieces of Career Advice for Young Professionals

12.30.2019 by admin // 7 Comments

Career Advice for Young Professionals, advice for young professionals, advice to young professionals, career tips for young professionals

Entering the working world after graduating is intimidating and likely out of your comfort zone. As a young professional your resume is likely light, primarily filled with extracurricular activities, internships and summer jobs. You’ve adjusted to being a senior in college, part of the group that knows everyone and everything within your college bubble. In your new workplace, you’ll transition to the most junior person in the room and learning to adjust to the new culture. It’s tough, but with the right moves you can get quickly back on track to being recognized as knowledgeable and a leader within the team. No matter what industry you’re in, here are 10 pieces of career advice for young professionals to help you advance your career.

1. Get Promoted Quicker By Hustling At Your Job

Your lifetime earnings are decided in the first decade of your career. When you are a young professional you must make the first 10 years of your career count. Create a plan to double, triple or even quadruple your salary. Does that seem out of reach right now? Maybe, but you need to think big and set high goals. You’ll get farther setting high goals for yourself than if you set really achievable goals.

2. Make a 5 Year Career Plan

Technology changes quickly. Whether or not you work in the technology industry the changes to technology will impact your career. There are news articles about potential jobs that will be displaced by automation by 2030. It’s hard to know what the hottest jobs and best career paths will be 10-20 years down the line. Start mapping your career by making a 5 year plan. What skill sets do you want to acquire? What do you want to learn more about?

3. Advance Your Career Through Investing In Yourself

Don’t put yourself on the path where your job will be automated in the next 10 years. Always continue learning and acquiring additional skills. You’ve invested in yourself by attending college, but it doesn’t end there. There are other professional certifications and additional degrees that can significantly increase your earning potential. Investing in yourself in your 20s is easiest when you have fewer responsibilities. This can mean getting your MBA or another Masters degree, getting your CPA, CFA or PMP. It can also mean strengthening your soft skills such as communication skills and leadership skills.

Investing in yourself doesn’t have to cost money. If you work for a large corporation your team likely has money for training and internal training available. Some companies also offer LinkedIn Learning for free or you can subscribe for free for a month. Don’t hesitate to ask your manager about what training options you have available through your company, or what opportunities there are for external training / certifications. If the external training / certifications will help you in your current job your employer may be willing to partially or fully pay for it.

4. Expand Your Network To Unlock Career Opportunities

Unlock career opportunities by expanding your network at your company and within your industry. You’ll be able to learn a lot about their own career journey and learn from their expertise.

It’s incredibly important to find advocates within your company. First, give them a reason to advocate for you by doing a good job. Then, get asked to be put on tough projects. Know that many decisions will be made about your career when you aren’t in the room. Have people who are in that room that will advocate on your behalf. Don’t know who will be in the room? A likely place to start is the head of the division, their right hand, and their human resources business partner.

It’s equally as important to have a network outside your company. You are more likely to get a job through an employee referral and will have even greater odds if the person referring you is one of your sponsors. To build the network external to your company go through your Linked In contacts and see who you’re already connected with from school, neighbors, former coworkers, etc that work in the same industry as you. Then, reach out and ask to grab a coffee to catch up or ask to catch up on the phone. It’s best to periodically connect with your network and not wait until you need a favor.

Once you’ve assessed your current network, strategically network. This means now that you know what gaps you have in your current network, expand your network so that those gaps are filled. Starting with friends of friends or “2nd” connections on LinkedIn are the easiest places to start.

5. Advance Your Career Through Mentors and Sponsors

It’s important to have both mentors and sponsors in order to advance in your career. Mentors will help give you career advice when you don’t know how to navigate a situation and help guide you on topics you discuss. Think of a mentor like a coach. Many companies offer formal mentor programs that you can sign up to be a part of. Career advice is especially important for young professionals because the visibility you have so far is limited. Those with more experience or have greater visibility to the bigger picture can help you dream bigger.

Sponsors will advocate for you to be put on good projects, considered for new roles and for promotions. They will help push you in the right direction, put you in meetings to help you get executive visibility or expand your network. If they ever come to you about a job in their group, or with a referral to another job you know that person is one of your sponsors. The best piece of career advice for young professionals is to get a career sponsor early on.

6. Maintain Your Network

Young professionals spend time building their network. A key piece of career advice for young professionals is to maintain that network. Add connections on LinkedIn. Schedule coffees, lunches and drinks after work with current colleagues. Reach out to classmates that are in your industry often. It’s very easy to lose connections with classmates if you don’t live in the same area and as you get farther out from college. Check in with former colleagues from time to time as well. It takes a lot of effort to establish that sponsorship relationship. These are the connections you should work hardest at maintaining.

If you see an article that someone in your network may find interesting, send it to them. Or, if you have heard that they have a major life event change (such as a promotion, having a child, kid going to college, kid graduating college, etc) reach out and congratulate them. Know their birthday, put it in your calendar and text them happy birthday. Time flies by. Even if it’s been a few years since you’ve connected it won’t feel as out of the blue as you think. Keeping in periodic touch with your network helps maintain your network and keep additional career opportunities open.

7. Say Yes to Attending Workplace Events

It’s important to build relationships at work. When you are invited to team building activities or holiday parties, attend them. If you do travel frequently for work go out for the breakfasts and dinners with the team.

When leaders or peers are traveling into town try to grab a coffee with them or a drink. As you advance in an organization, it’s more likely you travel and have the opportunity to build relationships with the coworkers you travel with. When you’re starting out, unless you are a consultant, it’s unlikely you have this opportunity. You need to create these opportunities for yourself.

Even if you are an introvert, try your best to attend a few work events. Attending for 30 minutes to say a quick hi and mingle is better than not attending at all.

8. Attend Conferences

Conferences provide an excellent opportunity to network and improve your skills. Women’s leadership development conferences will help you network with other women, how to get through barriers in the workplace that affect women and improve soft skills like leadership skills.

Other conferences, like industry conferences, will help you stay on top of the latest industry trends and network with other people in your industry. These conferences provide an excellent way to expand your network into other companies in the industry that you may want to work at one day. These conferences will also help your business acumen in your current job.

Don’t wait to be extended an offer to attend a women’s conference or an industry conference. Research what conferences interest you, find out if your company already sponsors other coworkers to attend and ask your manager if you’d be able to attend. The closer to the conference the less of a chance they will say yes as tickets sometimes sell out the same day they go on sale. But, this will put it on your managers radar that you’re interested in attending and open up the possibility of you attending a conference sooner than later.

9. Dress For the Job You Want

If you want to be a VP, you do not need to dress like a VP from day 1. You do, however, need to dress professionally. Professionally doesn’t mean suit and tie, it depends on how people dress in your office. When you first enter the workforce or if you naturally look “young” it is easy to be mistaken for an intern. Don’t wear something where someone will walk by and think you look sloppy. Spending money on clothes can sometimes be frowned upon, but in the context of work it should really be looked at as an investment (within reason). If you don’t know what to wear, Corporette is a blog focused on professional wardrobes and there are plenty of ideas on Pinterest as well.

You can buy nice work outfits from TJ Maxx or buy second hand and look professional. If work gives you a laptop bag with your laptop use that for a bit while you’re getting on your feet. From there, take advantage of Black Friday shopping at the outlets for a nice black tote bag. You do not need to start day 1 (or even year 2) with a Tory Burch or Goyard tote bag.

10. Figure Out What Work You Don’t Enjoy

The first decade of your career is as much about figuring out what you don’t like as figuring out what you do like. Do you want to be a manager or individual contributor? What projects do you like and what projects do you hate? Where would you never want to live? You don’t have to have this all figured out. But, you do need to begin to get a better understanding of what brings you joy, and what doesn’t. The best way to do this is to continuously try new things and step out of your comfort zone.

Hopefully you can find passion in your work and your job isn’t just a paycheck. If you aren’t passionate about what you do learn what you don’t like and what are areas you do enjoy. This will help you identify your next career move that you’ll find more happiness in.

Understanding what you don’t enjoy will help narrow the list to help you find your true calling.

See Also: Smart Money Moves in Your 20s

Career Advice for Young Professionals Summary

Set yourself up for success with this career advice for young professionals. Start by hustling at your job and make a 5 year plan. Continue investing in your education and network, network, network. Find a few mentors and sponsors to help coach you and advocate for you. Dress for the job you want, not the job you have. Lastly, don’t forget to learn more about what you like and what you don’t like.

What career advice do you recommend for young professionals? What do you wish you knew when you were just starting your career?

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Sponsorship at Work: The Secret Ingredient To Getting That Promotion

10.26.2019 by admin // 10 Comments

Sponsors for promotions. Career sponsorship. Sponsorship at work. How do you get a sponsor.

Having a career sponsor at work is critical if you want to advance your career. It’s not just about what you know but who you know. Many decisions will be made about your career when you aren’t in the room. Sponsorship at work will enable you to have people who are in that room that will advocate on your behalf. That room may be at your current company or at an external company. To advance your career faster, have a sponsor at work and other companies in the industry.

What Is A Sponsor At Work

A sponsor at work is a person who will advocate for you and your career. They are usually more senior in the organization and have an interest in helping you advance your career. Sponsors take a direct role in advocating for their protege and putting their reputation on the line. This includes making introductions to key connections and open doors that otherwise would not be open. Sponsors will recommend you for job openings. See a job you’re interested in? Learn how to ask your sponsor to refer you to a job.

Sponsorship at work is important for everyone, but especially important for women and minorities to advance their careers. Barriers to advancement for women and minorities tend to be structural and rooted in unconscious bias. Career sponsorship can help break down these barriers. Sponsors do not need to be the same race or gender. Do look for ways to relate to a potential sponsor though. Is there anyone high up in the organization that graduated from the same college, from the same hometown or share similar hobbies? If not, no fear. Identifying how you can help your boss, peers or cross functional team succeed will also put you on the path to getting sponsors.

Sometimes mentor and sponsor are used interchangeably, but are they the same? No. Sponsors and mentors play key but different roles when it comes to advancing your career.

How Do You Get a Sponsor at Work

Sponsor relationships are almost always informal and the relationship takes time to form. Be patient. There are certain steps you can take to fast track sponsorship at work.

One advantage of working for a large corporation as a young professional is leadership development programs. Leadership development programs will give you more visibility to senior leadership in a shorter time period. These leadership development programs tend to be for recent graduates or MBA students. Showing your ability to execute and responsiveness to feedback is critical. This will open the door for receiving advice from leaders in the organization. Continued interactions and continuing to provide value to the business will help turn these relationships into sponsorships.

Another step you can take is asking your manager for visibility to your skip level manager (your manager’s manager). This can include asking for a quarterly or semi- annual 1×1 with your skip level manager and being put on a high visibility project. Your skip level manager has greater responsibility and greater visibility to where the company and organization are going. If you show that you are a strong team member within the organization and share your career aspirations they are more likely to know if there will be an opportunity within the organization that meets your aspirations. They can also give you advice on what areas you should focus on to advance your career.

How Do You Get a Sponsor For Career Development At Another Company

Finding a sponsor at another company doesn’t have to be difficult. If one of your sponsors leaves your current company and moves to another company all you need to do is maintain contact. You can periodically send them articles you think they’d be interested in, or if you know they have a certain milestone they’ve reached like a child graduating high school reach out to congratulate them. Know their birthday and text them happy birthday every year. This holds true for anyone you consider a sponsor.

Other ways to find a sponsor at another company include networking at conferences, staying in touch with college professors, connecting with the alumni career center at your college and volunteering.

Sponsors at other companies are important as you may get to a point where your current company doesn’t offer opportunities that align to your career aspirations. Employee referrals are the easiest way to get your foot in the door at another company. If you don’t think this is relevant to you now because you’re perfectly happy ask yourself what you’d do if you get passed over for a promotion you deserve?

How Do You Know if Someone is Your Sponsor

A career sponsor is a bit more tricky to identify than a mentor as there are few or no formal programs for sponsorship in the workplace. Sponsorship happens more organically and is sometimes easier to spot after the fact. The first sign to look for is if they are introducing you to key contacts in the organization that aren’t directly linked to the work you’re doing.

You’ll also know someone is your sponsor if they advocate for your career when you’re not in the room and you find out after the fact the reason you got a job or project is because X person advocated for you. Another clue is if they reach out to you about an open position on their team or another team they think you’d be a good fit for and are reaching out to identify interest.

If you think someone may be your sponsor, or you would like someone to be your sponsor is to ask if they would advocate for you should a specific opportunity arise in the organization.

How to Ensure A Sponsorship At Work Is Successful

Your career sponsor must know your career goals to advocate for you. In addition, they must also know your limits. For example, are you willing to move for a job? Do you have limitations to how much you can travel? Having limitations is fine but it’s important to be specific with your career goals and limitations so your sponsor can best advocate on your behalf.

There will be many times in your career where there are potential discussions around advancing your career that are happening that you aren’t a part of. Perhaps a reorganization will occur, a new business unit is starting up or someone is leaving the company and none of these situations are announced yet. This is where it’s a must to have a sponsor in the room. They can advocate for you on your behalf.

Why Women Need a Sponsor At Work To Advance Their Careers

Women especially need sponsorship at work to help advance their careers. A Catalyst survey in 2008 found that women were being mentored at a higher rate than the men in their survey yet they were being promoted at a slower pace. They found that high potential women were over mentored and under sponsored relative to their male peers.

The Wall Street Journal recently wrote about women falling behind at work at the first step into management. Getting that first step into management is a huge barrier but you can’t move into upper management without that experience. You need sponsorship at work to help break this barrier. When you have no management experience, someone trusted and higher up needs to advocate that you should either be considered for a manager job, identify people to move underneath you already in the organization or give you reqs to open for new headcount. The more sponsors you have in the room advocating on your behalf, the easier it is to get past this barrier.

How have you leveraged sponsors to advance your career? How did you form your first sponsor relationship?