For many young professionals in their late twenties or early thirties, making ends meet may be a goal while putting money aside can simply be a sort of wishful thinking. Although there isn’t much that can be done to change the situation, it is important to be aware that this is the phase when you need to begin to save. Not only you’re probably in a good position in terms of having a job and a regular income, you also may not have many of the commitments that come later in life — with growing a family.
Is it possible at all to balance your budget and even save? The answer is yes. It takes some tough decisions, however, and some good insight into what it means to think about the future more seriously.
To help make a shift in your mindset, think of the following matters:
Your lifestyle
Lifestyle is one variable that significantly impacts your budget. The good news is that you have control of this factor and you can scale it back as much as you tolerate. To understand which areas are candidate for tightening, examine every single spending item and re-evaluate your needs. It is often easy to settle into a routine where every expense seems to be a necessity, but if you take a fresh look you may find that you can compromise or replace many of the running spending items with less expensive alternatives.
Even on areas that you enjoy and are keen to keep, consider reducing the frequency or looking for different, lower-cost option. For example, is travel a big interest? You don’t have to give it up; just do your research on budget travel, compromise a little on airline and hotel amenities, etc. When you take that approach you may be able to balance your spending and squeeze some savings in the process.
Future needs
It is often hard to save just for future needs without identifying them. To motivate yourself, begin to think and set a goal or two for your savings. If retirement or children tuition, for example, seem to be far in the future, try to come up with something that intrigues you — a trip to Europe, a new car, buying your first home, for example. You know what can keep you excited and willing to tighten your belt.
The most important step here is to get in the habit of controlling your finances to meet a goal. It is a learning experience that will come in handy in the future when you need the money for more serious, essential matters. Although it is important to live and enjoy your present, planning for the future and finding the tools and skills to handle it financially is essential.
You also need to save for a rainy day. You may be relatively young, healthy and enjoying a great job, but the situation can change simply overnight. Job losses, health problems and similar troubles can happen anytime and to anyone. Having a cushion of savings can protect you from a severe fall, help you weather the tough times much better and emerge in a better position. That is why it is important not to take what you’ve for granted, and consider having a solid contingency plans to be prepared for any crisis in your financial resources.
Take an opportunity
If you’ve managed to live without debt, you may take the first opportunity of income increase to save. This opportunity can come with a pay raise, a new job, a lucky win or any other money that comes as a bonus. Although you may be tempted to splurge and reward yourself, consider saving instead. Remember that adding this money up can put you in a position to enjoy something that is more valuable and currently appearing to be far-fetched.
Rania Oteify, a former Gulf News Business Features Editor, is a Seattle-based editor.
