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The ‘Real-World’ Money Rules for Recent College Grads
Valuable ways to save more and spend less when you’re starting out on your own
W
hen the financial
crisis swept the
nation, it left a
trail of destruction from sea
to shining sea. One reason it
caused so much devastation
is because at the time many
Americans were living pay-
check to paycheck, financ-
ing purchases they couldn’t
afford.
And
while
many
Americans have finally got-
ten wise to the importance
of saving a buck—today,
the personal savings rate is
in the 5 percent range—
author Eric Tyson says he
wishes it hadn’t taken a cri-
sis to make the message
sink in. And he’s adamant
that younger Americans
learn from the free-spend-
ing, debt-accumulating mis-
takes of folks of all ages.
And there’s no better time to
master a frugal mind-set
than when you start to
spread your adult wings
right out of college.
Tyson’s book, ‘Personal
Finance in Your 20s For
Dummies,’ provides young
adults the targeted financial
advice they need to estab-
lish a firm financial footing
as they start out in the “real”
world. The book covers top-
ics from how to invest wise-
ly to how to improve your
credit score to how to
change your spending
habits if you end up unem-
ployed. Reading it is an
important first step to build-
ing a strong financial foun-
dation.
“The key to a healthy
financial future is learning
how to save,” says Tyson.
“When you’re right out of
college and getting settled
into your first job, saving
money can be a challenge,
of course. Although
you’re likely not earn-
ing a super-high
income, you can
live life and still
buy the items you
need.”
How and where
you spend your
money is a matter of
personal choice and
priorities, but those
choices can affect the
amount of money you
have to save. Here
are a few tips from
Tyson on how to save
more and spend less:
— Rent smart.
When you’re in your
early 20s and you don’t
have dependents, living in a
low-cost fashion is easier
than it is later in life. There
are many ways to minimize
costs if you are renting your
living space. Two great
ways to keep costs down are
living with relatives or hav-
ing roommates. But no mat-
ter who you are living with
(and certainly if you are liv-
ing alone), you should min-
imize your monthly rent. If
you find that you’ve
allowed your champagne
tastes to exceed your beer
budget, so long as you’re
completing your current
lease,
there’s no reason you can’t
move to a lower-cost rental.
Just be sure to factor in all
the costs of moving to and
living in a new rental.
— Cut your taxes.
Alongside the costs of own-
ing or renting a home, taxes
are the other large personal
expenditure for most folks.
Everyone gets socked with
taxes when earning income
and when investing and
spending money. That’s the
bad news—the good news is
that you can reduce the
amount of taxes you pay by
using some relatively sim-
ple yet powerful strate-
gies.
— Cook up lower
food costs. Not eat-
ing is one way to
reduce food expen-
ditures, but you
might not find that
solution all that
appetizing!
Thankfully, there
are many other
ways to keep
your food costs
low. One is to
avoid eating at
restaurants and
instead learn to
cook for yourself.
Making your own
food is often healthier
(if you make the right
meals!), and because you
put in all that hard work,
you end up enjoying the
food more. When you go to
buy the groceries you’re
going to cook up, avoid
name-brand products and
instead go for store brands.
They are usually the same
quality (and sometimes the
same product) as the name
brand at a lower price.
—Get up and go for less.
Getting to and fro on a daily
basis can get expensive if
you don’t keep an eye on
your expenses. Many peo-
ple rely on cars for their
transportation. Cars can be a
tremendous financial bur-
den, especially if you bor-
row to buy or lease the car.
When possible, opting for
public transportation is a
great way to save money.
And in some cities, it allows
you to avoid having a car
altogether. Another great
option is to opt for two
wheels instead of four.
Riding your bike has the
double benefit of saving you
money and being great exer-
cise.
“Don’t make the mistake
of simply comparing sticker
prices,” he adds. “Consider
the total long-term costs of
car ownership, which
include gas, insurance, reg-
istration fees, maintenance,
repairs, and taxes. And be
sure to consider the safety
of any car you buy, as driv-
ing is surely the most dan-
gerous thing you do.”
— Finesse your fashion
finances. When you’re start-
ing your first “real” job, it’s
only natural to want to look
your best. But looking your
best doesn’t have to require
that you wear only the latest
fashions. In fact, you really
don’t need to buy lots of
new clothes every year.
True fashion, as defined by
what people are actually
wearing day to day, changes
quite slowly. In fact, the
classics never go out of
style. If you want the effect
of a new wardrobe every
year, store last year’s pur-
chases away next year and
then bring them out the year
after. Or rotate your cloth-
ing inventory every third
year.
— Budget your fun funds.
Having fun and taking time
out for recreation can be
money
well
spent.
However, if you engage in
financial extravagance in
the name of fun, you can
quickly wreck an otherwise
good budget. Spending
more money shouldn’t be
equated with having more
fun. Many movies, theaters,
museums, and restaurants
offer discount prices on cer-
tain days and times. And
other recreational options,
such as visiting with
friends, hiking, reading, and
playing sports, can be good
for your finances as well as
your mental and physical
health.
— Tame your technology
spending.
may 18, 2011 The Portland and Seattle Skanner Page 9