Money-Saving Tips as a New College Grad
This post is honestly outside of the wheelhouse of things I normally write about since I’m mostly a techie with no background in personal finance other than working at a high growth tech company after graduating, and saving the majority of my income.
That being said, I’ve seen a lot of millenials/Gen-Z ask how to save in the current economy and so, I figured I would provide my own two cents below. Note that these tips are generally geared towards saving hacks, not investment strategies.
Tip #1: Don’t Spend Money on Superfluous Things
There are a lot of unnecessary things that people spend money on. Designer clothing is a big one. But there are other small things people spend money on that you shouldn’t. $5 coffees are the biggest expense that people can cut back on and put towards repaying debt. Instead, it’s better to take what lessons we can from the pandemic and make food/coffee at home.
More importantly, if you stop spending on things you don’t need, you’ll be able to plan for unexpected things in the future (ie. emergencies) since you would have the money saved up in advance without the need to take a loan.
Tip #2: Credit Card Churn if You want to Travel
If you ask me, traveling is an expensive hobby to have, but there are some things you can do to minimize the cost. If you travel for work, definitely make sure you are utilizing your hotel points and miles with airlines appropriately. Otherwise, consider churning credit cards where you continue using the cards until you maximize on points associated with the card or any discounts within the first month. Then you rinse and repeat with a different card.
Personally, I am of the opinion that there isn’t much to see when you travel, especially since we have become a more global society, but definitely traveling once or twice a year is fine once you have some savings and are willing to churn new credit cards like this.
Tip #3: Live with Roommates or with Your Parents for as long as possible
Admittedly, I’m fortunate enough to be able to live at home and I’ve maximized this past year by saving most of my income. I recognize not everyone can do this, but if you can, you 100% should since you save a fortune and it frees up your time in the future to pursue the things you want or like.
If you aren’t living at home, live with roommates to split the rent and minimize your costs. If you have a significant other that you want to move in with, even better since you save more in rent.
That being said, I think it’s fine to live by yourself as long as you are able to save the majority of your total compensation.
Tip #4: Pay Off High Interest Debt
Pay off any high-interest debt like credit card debt ASAP! If you have things like student loans that have a >5% APR, try to pay those off soon too.
Tip #5: Invest in Real Estate if You can
The fact of the matter is that you need some place to live. If you are paying rent, that is a cost that you aren’t building equity towards. If you have saved up for a few years, it may be worthwhile to set aside some of that money for a downpayment on a house. Aside from the down payment, you can offset your 30-year mortgage by renting out the other rooms in your house so your rental income should pay for most of the monthly mortgage payment.
That being said, while interest rates are at all-time lows, property prices are at all-time highs. I’m 100% speculating here, but many tech companies are only partially remote, meaning most employees at tech companies as well as banks and consulting firms will need to move back to their home office locations, so real-estate prices in areas tech employees flocked too will likely decrease once we start coming out of the pandemic. It may be worthwhile to wait a little bit if you want, but do this at your discretion (I’m not a real estate guru lol).
Conclusion
In effect, if you don’t have a large enough income, continue to live like a student. If you do have a large enough income, then operate with the mindset of saving first and spending second. Admittedly, there are other things you can do to generate other revenue streams such as investing in high dividend % stocks or putting money into a Roth IRA/401K if you are employed by a company, but these are some general tips to get you started with first.
