Are you working on saving up for that brand new car? Do you find yourself spending too much money on take out or that cup of iced coffee every morning? You came to the right place! YouNancial will show you all of our tips and tricks to help you take control of your finances! We understand how difficult it can be to manage your money as most of us are SJSU students who go through the struggles with paying off college tuition, student loans, and more important expenses. Having a healthy financial life all while being a full time college student isn’t easy. So where exactly is a good place to start? 

Why should you save money?

Saving money can be a daunting task especially if you are running on a tight budget. However, taking those little steps to saving such as skipping out on take out and eating at home for a couple of days makes a dramatic difference in approaching your financial goals. There are endless benefits to saving money such as:

1. Financial security 

2. Avoid debt 

3. Cuts back on reckless spending 

4. Generates interest 

5. Helps prepare for retirement 

Where do I start?

Saving money is not going to be something that can be done in seconds, thus you must begin with yourself. Ask yourself; how much am I making and what do I spend my money on? Once you answer this question, you already have a good foundation in creating a budget. 

The first step is to total up all fixed expenses. These can include:

1. Rent

2. Loans

3. Utility bills

4. Credit card bills

5. Car payments 

Then total up all other necessary expenses such as:

1. Food

2. Gasoline 

3. Clothing 

4. Entertainment 

Once you have all your expenses organized, calculate how much you make monthly from all your sources of income. Then subtract your expenses from your income and see how much money is left. If you are not satisfied with the amount leftover, this means you must cut back on some necessary expenses such as opting for home cooked meals instead of buying take out. This template is an easy way to track your spending habits and discover your areas of improvement. 

Here is another example of a great template to use for budgeting: 

1. The Expense Tracker

   1. Created by Deborah Ho, the Expense Tracker helps you keep track of your spending. This application uses responses from Google Forms and inputs them into an organized template on Google Sheets. Start by filling out the Google form after everything you buy and you’ll start to see your spending habits in action seconds after. Then set your budget on how much you’ll want to spend every month and if you overspend, the month will turn red. 

How much should I save?

Depending on your experience and circumstance, you may want to reach a different savings goal, whether little or big. However, if you are just starting out with budgeting, it is recommended that you follow the 50/30/20 rule. The 50/30/20 rule is a beginner friendly set of guidelines to jumpstart your savings plan. It is based on rules that outline how your money should be allocated.

For instance:

• 50% → fixed expenses 

• 30% → nonessential items

• 20% → savings 

Where do I put my savings?

Now that you’ve saved up all this money, where exactly do you put it? There are several types of places that provide a safe place for your finances such as banks and other financial institutions. You’re looking for only the best home for your money which allows growth and stability. Luckily, you can easily compare the following and discover which best works for you. 

Savings Account

Let’s start off with the most simple type; a savings account. Savings accounts are a great starting point to store your finances because it is easy, simple, and requires little to no fees to open up an account. In addition, saving accounts are ideal for accumulating interest over time. To own a savings account, it is recommended that at least $500 is kept. 

Certificate of Deposit

A certificate of deposit is another type of savings account where it requires the owner to lock their funds away in a savings account for a specific amount of time until a maturity date. If you are looking for an account that generates more interest than a traditional savings account, a certificate of deposit may be for you. However, it does have some cons that you want to consider before opening one. Certificate of deposits have more restrictions in which you cannot withdraw money before the maturity date and if you do, you are charged a penalty fee.

401k

No matter what age you are, it is important that you start saving up for your retirement.  A 401k is a beginner friendly way to start your funding for retirement as it is easily accessible and offered by most employers. A 401k is operated by your employer where they take a portion of your income and match the amount to save into your 401k account. A benefit of a 401k is that the money stored in the account grows tax free. You can also save money by using a 410k account. That’s because you can deduct your contributions when you file your income tax return. This reduces your taxable income, which in return can save you a significant amount of money. Some disadvantages of a 401k include fewer investment options, required minimum distributions, and higher fees. 

Roth IRA

A Roth IRA is another type of savings account for retirement that has a couple of distinguishable factors from a traditional 401k. A major benefit of a Roth IRA is that all future withdrawals are tax free, which can save you a lot of money in the long run because you are getting taxed less. Consider opening a Roth IRA over a 401k if you are more interested in tax-free income when you retire than in a tax deduction now when you contribute. Unlike a 401k, a Roth IRA has no required minimum distributions and provides more investment options. However with every positive, there are some negatives. With a Roth IRA, you must be 59 or older to withdraw funds if you do not want to be taxed. It also has lower contribution limits compared to a 401k. 

Good luck on your financial journey! 

We hope you found these tips and advice helpful in improving your journey to financial success. Stay tuned with YouNancial for more insightful tips and tricks on how to save your money.