Saving Series: Tip 5! Last One!

TIP #5: PRIORITIZE YOUR SAVINGS

In August of 2011 I moved to Chicago with less than $400 to my name. I had an apartment to pay for, books to buy, and I was also hoping to be able to eat. One of the reasons graduate school and my subsequent move to Chicago was possible was that I was offered financial help from Loyola as a research assistant. This meant that my tuition was covered, and I was to receive a monthly stipend on which to live. Pretty swanky!

Except. Chicago is expensive. My apartment costs almost twice what I paid in Norman, for a little more than half of the space. So even though my income is higher, my cost of living is higher. In fact, my ratio of income to cost of living is exactly the same as it was in Oklahoma. Despite this, however, my bank account looks drastically different than it did a year ago. That is solely because of my new budget.

After I tracked my spending and made my cutbacks, I set goals for myself. I knew I wanted to start saving a percentage of my income each month, and I also wanted to put aside a little amount each month for my student loans.

So I did a little math. I figured out what my income would be each month. I subtracted all my necessary expenses. Then, based on my tracking, I budgeted for groceries. Then I subtracted the percentage that I wanted to put into savings. (Use your judgment for that one. I aimed for 10%.) Last, I decided how much I wanted to put aside for loans. The leftover amount was my spending money.

You can tweak and adjust your budget if you want to save a little less or a little more, or if you want to put money aside for a more short-term goal, like an appliance or a trip. Just try to be honest about what you can do, based on your tracking.

Here is an imaginary budget just to show you what I'm talking about:

INCOME	NECESSARY	SAVE
1400- Work	600-Rent 150-Food 60- Insurance 40-Internet/Cable	150-long-term 150-short term 40-loans
TOTAL: 1400	850	340

By deciding what you want to save first, you can determine your leftover money to spend. For this imaginary budget, the spending money would be $210.

It's easier to save when you've already got it figured into your budget. Instead of hoping there is money leftover each month, go ahead and put it aside. I use a budget like this to keep track of everything and it has changed my life. I went from being broke to already having 3 months of rent saved. I keep my budget in a pretty journal I got for Christmas. I write my budget for each month on a separate page and I track my spending to make sure I stick to it. So far it's been extremely successful. Now it's your turn. Again, whether it's a pretty journal, a spreadsheet on your computer, or a dry-erase board, write. it. down. This way you know exactly where you are every day and you can adjust accordingly.