Help

[dynobyke]

I am 24 years old. I still live at home and am working through college, my only bills are gas, gym, eating out weekly, and weekend money. I am having an extremely hard time holding onto anything more than $50 for any period longer than a week. I get paid about $350 every 2 weeks, and it is always gone by the time my next check comes around. If I don't spend it during those 2 weeks, then I am saving it to combine with my 2nd check only to blow it all together. I am struggling with the concept of saving money for the long-term.

I am constantly thinking about things I could buy with that money and be enjoying all the while it is just sitting there in the bank, or in my wallet, wherever it may be. If it is cash I have it is even harder to save than if it is locked up in my savings. Do you have any advice or strategies I can try to hold onto my money?

Even as I am typing this, I can't understand the purpose of saving for long-term, it just seems like I could be enjoying life and everything right now, with what I have earned and worked hard for, why let it sit and rot while I live without all the things I want right now? I could be dead before I ever see that money again!

I have a desire to save it, I just need a new attitude or perspective, or strategy to help me get there. For instance, the tax kickback for me is about $450, and my paycheck that week will be around $350, already my mind is racing as to what I can upgrade on my car, I have been browsing online for car parts when I don't even have the money yet!

I have also been thinking about going on a cruise this summer, yet I have only $80 in my savings, I am planning ahead with money I don't have. How can I stop thinking about ways to spend my money before I have it? Please help, I have an open mind to any advice! Thank you!

[jIM_Ohio]

YES- every 2 weeks, have $50 get withdrawn automatically from your account into an investment.

You need to decide 2-3 things
1) time horizon of investment
2) risk level of investment
3) reason for investment

If you think retirement is a good goal (I do), then I would suggest using an IRA to hold the investment, and choosing something growth oriented. Growth will take on risks (to get you a higher return), but for a goal which is 40 years away, time will reduce that risk anyway.

The $50 comes out every 2 weeks, so at end of year that is $1300 set aside. If you prefer better access to money, then leave it in a taxable account. This will change your tax return each year... complicate it some... so understand things may not be so simple anymore.

T Rowe Price is one investment house which accepts automatic investments as low as $50.

If I had to recomend a fund choice, here is what I would do:

Retirement (growth) either Spectrum Growth PRSGX or Target Retirement 2055 TRRNX
Moderate Growth (taxable account) either Blue Chip Growth TRBCX or Equity Income PRFDX
Conservative (want to invest, but take on little risk) Spectrum Income RPSIX.

I own Equity Income and Spectrum Income. In the past I held Blue Chip growth and spectrum growth. I also own many of the funds that spectrum growth holds.

The first two choices are fund of funds- meaning it is one mutual fund which buys other mutual funds. This provides you with broad diversification for minimal amount of investment.

[project15]

Would you rather be dead with money still in the bank or alive with no money for food?

[Joan.of.the.Arch]

So you have trouble finding reasons to save? Are you hoping to move out of your parent's home soon? You will need money for that. Look into what an apartment on your own will cost. Getting moved in can cost well more than just one month's rent. If this is a goal, look into the details and I think you will find that you'll need some money saved for it.

Once you have your own place you will need to save earnings to pay your rent and utilities on time. Saving for longer term goals may become more real to you once you are accustomed to saving in each month to pay for those necessary things.

[disneysteve]

Being 24 and still living at home would be the only incentive I'd need to save my money - so I could get out of there ASAP! The growing pattern of adult children living at home boggles my mind. I don't get what has changed in people's brains to no longer have the desire for independence. I certainly hope my daughter has not caught that disease.

OP, what are your goals in life? Do you want to get your own place? Perhaps get married, buy a house, have a family, travel, replace your vehicle at some point, retire eventually? All of those things take money and require savings to meet those goals.

[dynobyke]

Thanks to everyone for the responses and motivation. I will look into a savings account that locks in my money and I will not even check the balance on it. Yes I would like to move out, it has just been hard to do while going through college and holding only a part time job, but I know many others have done it in harsher circumstances. I have decided that I am going to change myself and force myself to deposit more money into a savings account and some into a longer-term retirement account and focus on my future as an independent adult. Yes I would like to have a family and I will start thinking about that instead of being selfish from now on. Thank you everyone for the inspiration and I will update you on my progress.

[disneysteve]

In the process of improving your savings habits, don't forget to leave some money for spending. Come up with some reasonable amount to give yourself for fun money to be spent each month on whatever so that you don't feel totally deprived.

[InDebtInDC]

I am struggling with the concept of saving money for the long-term.
I am constantly thinking about things I could buy with that money and be enjoying all the while it is just sitting there in the bank, or in my wallet, wherever it may be. If it is cash I have it is even harder to save than if it is locked up in my savings. Do you have any advice or strategies I can try to hold onto my money?
Even as I am typing this, I can't understand the purpose of saving for long-term, it just seems like I could be enjoying life and everything right now, with what I have earned and worked hard for, why let it sit and rot while I live without all the things I want right now?

To put it in terms you can understand, pretend you had enough to pay cash for a new Corvette. If instead of buying the 'vette today, you saved your money and invest wisely. In several years, you will have enough to pay cash for a Ferrari.

Is waiting a few years to go from a 'vette to a Ferrari worth it?

If you happened to die, then the money would go to your parents or whomever you choose, or any charity you like.

[maat55]

Sit down and make a budget. In the budget allow an amount you can save. Do not spend a single penny that is not budgeted. Learning to budget and save your money is developing money management skills that will serve you well your whole life. Most people learn to late in life the importance of developing these skills.

Important, make the budget and stick to it.

[scfr]

why let it sit and rot while I live without all the things I want right now?

Ahh ... But it won't be rotting! It will be growing! Why eat a handful of seeds now when, with patience and nurturing, you can have a whole garden full of lucious veggies and flowers later?

I understand that it is hard to see when you are 24. I was in your shoes once.

Ann Landers and a Defining Moment in my Financial Life: Scfr's Personal Finance Blog

[maat55]

Ahh ... But it won't be rotting! It will be growing! Why eat a handful of seeds now when, with patience and nurturing, you can have a whole garden full of lucious veggies and flowers later?

I understand that it is hard to see when you are 24. I was in your shoes once.

Ann Landers and a Defining Moment in my Financial Life: Scfr's Personal Finance Blog

Exactly!!!!!

[skydivingchic]

Is your paycheck direct deposited? Can you have your employer split it over several accounts? My check is currently split over 3 accounts - some to my emergency fund savings, some to my short and mid-term goal savings (new to me car and travel!), and the net to my checking. It helps that I never really "see" the money that goes to the two savings accounts - I have to make a concious decision to transfer or withdrawl that money. Also, my 401(k) contribution is taken out my paycheck and I have an automatic monthly debit from my checking account for my Roth IRA. This all happens automatically so I don't have to think about saving.

I would echo some of the previous advice that you should set up a budget, allowing some amount of money for fun stuff. It will make your life a whole lot easier when you are on your own if you have learned to budget your money.

You've mentioned several things that could make good motivating savings goals (moving out, retirement, taking a cruise). Make it a goal to move out within a year (or whatever timeframe). Then research how much security deposit, rent, utility deposit, moving expenses, etc will be and how much you have to save each month to reach that goal in the given timeframe. Print out a picture that represents your goal (maybe a picture of an apartment or a sign that says "no more curfew") and put that picture in your checkbook or on your debit card so that you are reminded of your goal every time you make a purchase. Start contributing to a Roth or 401(k) and set it up to happen as automatically as possible.

[Broken Arrow]

Ahh ... But it won't be rotting! It will be growing! Why eat a handful of seeds now when, with patience and nurturing, you can have a whole garden full of lucious veggies and flowers later?

I understand that it is hard to see when you are 24. I was in your shoes once.

Ann Landers and a Defining Moment in my Financial Life: Scfr's Personal Finance Blog

Lovely play on words.

I wish I had the foresight to have done that when I was in my 20's....

[dynobyke]

I received this week's paycheck and I plan on setting up a written budget for every penny of it. I also will look into direct-depositing my checks from now on!

[JanH]

Good for you! I think you'll find a satisfaction from having money in the bank to feel just as good as spending on something. I have!