Question: I’m not the best at saving money in general I only have a few hundred saved currently and feel like I’m behind the marker. My family isn’t the best role models always being broke and I’ve asked my guardian what should I be saving for (to give it more of a purpose so I don’t use it) and I’ve just been answered with “I don’t know”
I want to be responsible with my money I’m in school and have a job I don’t want to blow it all.
Answer: How Much Should You Have Saved at 18?
First off, it's fantastic that you're thinking about your financial future at 18. Many people don't start considering saving and budgeting until much later, so you're already ahead of the game by wanting to be responsible with your money.
Is There a Specific Amount You Should Have Saved?
There's no exact amount that you “should” have saved by 18. Everyone's financial situation is different, influenced by factors like part-time jobs, living expenses, and family support. What's more important than the amount is developing good financial habits that will benefit you throughout your life.
Why Saving Matters
Saving money isn't just about accumulating wealth; it's about:
- Building Financial Security: Having savings can protect you against unexpected expenses, like car repairs or medical bills.
- Achieving Goals: Savings can help you reach short-term goals (like buying a laptop) and long-term goals (like traveling or buying a home).
- Reducing Stress: Knowing you have a financial cushion can provide peace of mind.
Setting Purposeful Savings Goals
To give your savings more meaning and to stay motivated not to spend it impulsively, consider setting specific goals. Here are some ideas:
Emergency Fund:
- Goal: Aim to save at least $500 to $1,000.
- Purpose: Covers unexpected expenses without derailing your finances.
Education Expenses:
- Goal: Save for college tuition, textbooks, or courses that interest you.
- Purpose: Invests in your future earning potential and career opportunities.
Transportation:
- Goal: Save for a car, bicycle, or public transit passes.
- Purpose: Improves your mobility for work and social activities.
Future Living Expenses:
- Goal: Save for moving out, including rent deposits, furniture, and utilities.
- Purpose: Prepares you for independent living.
Retirement Savings:
- Goal: Open a Roth IRA and contribute what you can.
- Purpose: Takes advantage of compound interest over many years.
Personal Development:
- Goal: Save for hobbies, like music lessons or sports equipment.
- Purpose: Invests in your personal growth and happiness.
Creating a Budget
Budgeting is a powerful tool to take control of your finances.
Steps to Create a Budget:
Track Your Income:
- List all sources of income (part-time job, allowances, freelance work).
List Your Expenses:
- Fixed Expenses: Regular monthly costs like phone bills or subscriptions.
- Variable Expenses: Costs that change monthly like groceries, entertainment, or clothes.
Set Spending Limits:
- Allocate a certain amount for each expense category.
Set a Savings Target:
- Decide on a percentage of your income to save each month (even 10% makes a difference).
Monitor and Adjust:
- Review your budget regularly and make adjustments as needed.
Tools to Help You Budget:
- Apps: Mint, YNAB (You Need A Budget), or PocketGuard.
- Spreadsheets: Use templates from Excel or Google Sheets.
Building Good Financial Habits
- Pay Yourself First: Treat savings like a non-negotiable expense.
- Avoid Impulse Purchases: Wait 24 hours before buying non-essential items.
- Use Cash When Possible: It can help you stay mindful of your spending.
Educate Yourself: Read books or follow blogs on personal finance. Some recommendations include:
- “The Total Money Makeover” by Dave Ramsey
- “I Will Teach You to Be Rich” by Ramit Sethi
- “Rich Dad Poor Dad” by Robert Kiyosaki
Overcoming Family Financial Patterns
It's understandable that coming from a family that's “always broke” can make financial planning challenging. Here's how to navigate that:
- Seek External Mentors:
- Teachers, counselors, or community leaders can offer guidance.
- Join Financial Literacy Programs:
- Look for workshops or courses offered by local nonprofits or online platforms.
- Surround Yourself with Positive Influences:
- Connect with friends or peers who have good financial habits.
Staying Motivated
- Visualize Your Goals:
- Create a vision board or use apps to track your progress.
- Celebrate Small Wins:
- Reward yourself when you reach mini-milestones.
- Stay Accountable:
- Consider finding a “money buddy” to share goals and progress.
Final Thoughts
Remember, the journey to financial responsibility is a marathon, not a sprint. It's okay to start small—as little as $10 a week adds up over time. The key is consistency and making informed choices about where your money goes.
You're taking an important step by seeking advice and wanting to improve your financial situation. Keep educating yourself, stay focused on your goals, and don't hesitate to ask for help when you need it.