25-year-olds: here’s what to do with your money

Alright 25-year-olds, grab a cup of coffee (espresso will do) and let’s talk finances.

I’m 28, so we’re in similar boats

The difference is, I have spent the past six years living in two very expensive cities (Chicago and Los Angeles) with very high overhead.

This, especially right out of college, made it very difficult to save money.

Very difficult.

In addition, there are little things in life that tend to add up

Things we forget about: toilet paper, bananas, coffee mugs, etc.

And what about the Internet? Cable? Electricity?

Some of these amenities don’t come cheap. Have you ever seen an electricity bill for an apartment in Chicago during the summer? If you have the AC on, you’re going to pay a fortune. And paying for heat in the winter is even worse.

All these things are not to be taken for granted.

But without discipline, you‘ll find a way to squander this money

Money you would otherwise be able to save.

Here’s the thing about money:

If you absolutely had to pay it, you would find a way.

If the government suddenly stepped in and said, “Everyone, you now owe an additional $50 each month for Trump Tax or you get fined,” you would find a way to pinch pennies somewhere and pay that $50.

People don’t carry that same level of discipline into their personal finances

Unless someone is enforcing the rules, they have no problem spending unnecessary amounts of money.

I am telling you, for the first 4 years out of college (really only up until the past year), I could barely save 5% of what I made in a month, if that.

I was literally living paycheck to paycheck.

But, for no other reason than to establish the habit, I forced myself

I gave up certain luxuries.

I took the train on weekend nights instead of ordering an Uber, I bought groceries that were on discount, I made sure to always turn all my lights off when I left my apartment, etc.

I had to, otherwise, I wouldn’t be able to pay all my bills.

If you don’t do this, then, as my father would say, “Expenses rise to meet income.” Meaning, no matter how much you ever make, you will always live right up to your means. You won’t be able to save, because you lack the discipline to do so.

Here’s what that means for you:

Take your paycheck:

Subtract all your realistic, “I have to live,” bills.

Groceries, car payment, student loans, transportation, etc.

What is your leanest salary? What can you live on, bare minimum?

Ok, once you have that number, add an extra $100 on top of that as a buffer, for going out once or twice between paychecks, etc.

Everything else? Direct deposit into an account

I know, you don’t want to do it.

I know, you could spend more.

I know, I know, I know.

But don’t.

Force yourself to live this way for a year.

Not only will it teach you so, so much, but you will end that year with such healthy savings account that you’ll feel like you have solid ground to stand on.

Trust me, saving money when it was hardest for me to “save money” was the best advice I ever followed.

This article first appeared on Medium