It’s been nearly two years since I finished college, left home and began life as a working-world “adult.” And through the whirlwind times since, I’ve learned a thing or two about keeping my finances in order.
The lessons haven’t stopped, and I’m by no means mistake-free these days, but I’m finding my footing, feeling confident about budgeting wisely, and slowly getting ahead. With almost 24 months experience to draw from, now seems an appropriate time to reflect upon what I’ve found to be three keys to financial stability.
1. Finding an affordable home
Presently, about 40 percent of my income goes toward rent, which given my modest salary and savings, is quite obviously an unreasonable figure. Dedicating nearly an entire paycheck to a 400-square-foot studio can be downright depressing (my bed’s about eight feet from my stove), and makes planning a month’s worth of expenses rather challenging.
My rental situation, I realized long ago, needs to change.
Luckily, my lease ends in April, and I’m staying put in Chicago, meaning this apartment-hunting process should be far easier than times past, when I moved longer distances and needed to find a pad as quickly as possible.
I’m already researching neighborhoods, comparing prices and considering a roommate. A move might lengthen my commute and lead to less privacy, but I’m pretty sure shaving a couple hundred bucks off my monthly costs ($200 times 12 months = $2,400 saved over a lease), will be worth the extra effort.
2. Setting realistic savings goals
With a more reasonable rent, I’ll have a greater ability to save — an adult-like priority I’ve never abandoned but have generally been unable to stick with since leaving school.
But even with more cash in hand, I’ll have to remain realistic. I’ve found stashing $500 in savings right after a paycheck only to gradually withdraw the full amount over the following 30 days (as bills and other expenses pop up) is a recipe for discouragement. And transferring money back and forth between accounts can lead to bank fees, nuisances that only add to financial frustrations.
So, though saving only $100 — even $50 — each month might seem less than worthwhile, it’s far better than doing nothing. Watching a savings account grow, however slowly, is not only rewarding, it takes discipline, a trait that’s important in all facets of life, not just those involving money.
3. Understanding costs of living and anticipating surprises
When moving to a new area and organizing a line-item budget (I’d recommend making one if you haven’t already), it’s important to use close-to-accurate numbers and anticipate expenses that might materialize.
Arriving in Illinois, I had no clue how much registering my vehicle and getting a new driver’s license might cost. I wasn’t even sure when I needed to do those things or what steps were involved.
Then, one day, a bright orange ticket tucked under my car’s windshield wiper served notice. The $200 ‘no city sticker’ fine could only be paid once I updated registration, got an Illinois license and purchased a city sticker. The grand total exceeded $500, a sum that threw off my short-term budgeting big time, but also taught a lesson I won’t forget come re-registration season.
Looking back, these episodes, as frustrating and even embarrassing as they seemed, have proven rather valuable. I haven’t mastered independent living quite yet, but I’m getting closer, gaining control one mistake — one lesson — at a time.