Savings for Beginners
When it comes to building savings, there is a lot of trial and error. In this article, I’ll share some simple steps on how to start saving.
By Maggie Argiro — January 23, 2023
When you're just beginning, getting ahead of your finances can seem like an impossible task. Everything costs money, and it takes a lot of work to save on top of your college expenses. When it comes to building savings, there is a lot of trial and error, and one method doesn't work for everyone. In this article, I'll share some simple steps that have worked for me and that I hope will work for you too!
- Set small, attainable goals and track them. Little choices will add up over time. You can do many small things, like finding a bank with a good interest rate on their savings accounts or setting aside $5 per day for savings. What has helped me be more motivated actually to do those little things is seeing a graphical representation of my progress toward a financial goal (think of those paper thermometers you might have colored in when your class was fundraising for a field trip). This approach applies to other things, too, like paying off a student loan or a credit card. I like to keep my graph in a spot I look at daily to stay motivated. I give myself positive reinforcement to continue working toward my financial goals. For example, after saving $500, I can treat myself to a massage, and after saving $1000, I can get a manicure. If you try this approach, think of ways you can incrementally reach a larger goal and how you can creatively motivate yourself to reach it.
- Try the envelope method. I often recommend this method to students trying to learn how to budget. It worked great for me when I got my first full-time job. The envelope method is a simple way to organize your income and find a comfortable budget. Each payday, after I paid my essential bills and set some aside for savings, I put strict sums of cash into envelopes labeled with different categories. For example, I set aside $100 for eating out, $200 for groceries, and $40 for fun, like going to the movies, etc. Once I used up all the money in the envelope, I could not add more or use m oney from my savings account. At the end of the two-week pay cycle, if I had money left in the envelope, I'd put that in my saving account. This method helped me evaluate how I use my money and where I had greater expenses. I could see areas where I needed to cut spending and where I was doing well. From there, I could craft an accurate budget that minimized spending. The only downside of this method is visiting the ATM every two weeks. But there was lots of motivation to spend wisely. If I was disciplined at the end of the two-week pay cycle, I was rewarded with adding to my savings account.
- Remember, savings come, and savings (sometimes) go. It's a hard lesson when you realize you have to dip into your savings account for an unexpected expense. Some people set up separate emergency funds in addition to their savings accounts for that very purpose. The fact of the matter is, sometimes, after working diligently and with discipline for months, you may have to use some of your savings for unexpected or planned major expenses. It is so hard to feel like you're starting all over again. Remember: you're not alone when it comes to the hard parts of budgeting. It takes a lot of time and energy to figure out how to save and spend without feeling like all your hard work (and money) has gone away. If this happens to you, give yourself some space to process before getting back to work.
- Be prepared. Many high schools and colleges offer personal budgeting or finance classes. You can also use the SAGE Scholars Newsroom to read up about what you can expect to spend on in college, what is the FAFSA, and other financial matters, like building credit. If you need to take out student loans, research what to expect first so you know what you're getting into. So many students start out behind after graduating from college because of student loan debt and the cost of a college education. The more you know about managing your finances in college and beyond, the better prepared you'll be to save, manage unexpected costs, and build your credit. Ultimately, you'll have more choice and control over your finances, career, and life choices beyond graduation.
Maggie Argiro
Maggie Argiro is a library professional, writer, oral historian, and is TEFL-certified. She currently manages the circulation desk at the South Seattle College library where she is deeply invested in helping all students reach their academic goals.
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