Saving can be boiled down to a few universal financial truths. The sooner you know and internalize them, the sooner you can start enjoying a responsible, sustainable lifestyle.
1. Pay Yourself First: No, not with an Xbox, but by saving religiously. Finance your emergency fund, retirement accounts, and general savings account before buying toys.
2. Harness The Power Of Compounding: J.D. over at Get Rich Slowly writes, “I wish somebody had shown me a chart demonstrating the difference between paying a credit card company 18.9% a month on $10,000 versus a bank paying me 3% interest on the same amount.”
3. Avoid Lifestyle Inflation: More money should mean more saving, not more spending. When you get a raise, resist the urge to live a better life, because once you start, it’s impossible to go back.
4. Avoid The Chains Of Debt: Again, J.D. says it best: “Debt is slavery.” For young people, there is no such thing as “good” debt. Unless you’re buying a house or earning a career-making degree, you should not be in debt, period.
5. Save On Things Big And Small: Scrutinize the big buys, yes, but also the little ones. They add up faster than you would expect. Consider your grocery list—you do shop with a list, right?—it’s not a series of huge line items, but lots of little missed chances to save.