Curious how to save for a holiday when you’re young and broke? 3 steps you can take right now to start
Bernie Sanders gained a cult following among Millennials in the 2016 U.S. election by campaigning on the platform that the young people today are being screwed. We’re crushed by student loans and wallowing in a job market that underutilizes our skills. Is it any wonder young people don’t know how to save for a holiday when they can barely make rent?
When I left my job a little over 6 months ago, it wasn’t a straw-that-broke-the-camel’s-back moment, but a calculated escape from the hamster wheel of corporate America. I made sure my retirement account was set up, and I had a cushion of savings to get me to where I need to go. Here’s the 3 steps I took to get to that point.
Learn How to Save for a Holiday in Your 20’s
1. Stop Spending.
Question Every Purchase
When I knew I wanted to quit my job and travel, I did what I needed to squirrel away money. I stopped eating out, packing a lunch to work everyday. I also banned online shopping. Every purchase I did make had to hold up to 2 questions:
- Do I need this?
- Do I want or need this more than I wanted to quit my job?
My point is that there is always a way to spend less, even if you live somewhere with a high cost of living.
Recruit trusted folks to help you.
Living in New York, my friends understood the struggle of saving money and understood when I said I was trying to go out less. Gone were the days of catching up over $14 cocktails (shocking that we ever paid that much, but that’s Manhattan for you). Instead, we bought inexpensive bottles of wine and cooked dinner at each other’s houses.
2. Get a Handle on Debt.
Pay It Down
This is a no brainer. The worst offender is credit card debt, which is probably the most expensive kind after payday loans. Pay them all off if you can. Half of my friends from high school are anchored by crippling student loans. They’re worried about losing their jobs and not being able to service their debt. So they work like crazy and never take so much as a sick day. Add the insanely high cost of living and it seems like there’s just no money left over after food, rent, and loan interest.
Make a Plan
Here’s my advice. Pay down as much of your debt as possible (credit cards first!) to minimize your monthly debt payments. Subtract that from your monthly take-home pay and that’s how much you actually make. Now start acting like it. Let me illustrate my point.
If your “take-home pay” is $2000/month, and you pay $500/month to service your debt, what you really make is $1500 a month. Does it make sense for you to be living in a $1,200/month apartment? That only leaves about $300 of income a month for spending—you could have electricity, or eat, but probably not both.
With the mindset that you make $1500 a month, a lot of things no longer make sense. If you made $500 less than you think you do, should you live farther away from work and commute in? If the savings outweigh the extra cost of transportation, you just found extra money in your budget every month.
3. Find a side gig.
Many people are stuck in the mindset that their only source of income is their jobs. We give everything to one company hoping to get that promotion, pay raise, corner office. That bigger paycheck right over the horizon always seems like the panacea to all our problems. (“If I could afford an apartment closer to work, I wouldn’t feel so tired all the time!”) But if you’re scraping to get by on what you make, you may need to redirect some energy into a side gig.
Have a craft.
For most traditional knowledge workers, making money is a multi-month process of finding a job, working for at least a year (you don’t want to look flakey on your resume) and leaving when we think we’ve made enough. We forget that there are jobs in the world that don’t involve an HR team and multiple-interview vetting processes. Jobs such as bartending, waiting tables, catering, freelancing writing, or starting your own business. These are crafts.
Assess latent skills.
Do you have any experience cooking? Making cocktails? Did you once spend 6 months on a photography hobby that fizzled, but still have a camera and a copy of Photoshop? All of these are things you can turn into a craft. Check out sites like Fiverr or UpWork that have a low barrier to entry and allow you to sell your skills online with little or no cost.
1.) Stuff You Own – One of the wonderful things that travel teaches us is to value experiences over things. Turn your junk into funds for your travels!
2.) Stuff You Make – If you’re feeling entrepreneurial, e-commerce may be the way to go. Sell things you make on marketplaces like Etsy, or learn about buying and reselling on Amazon.
How do you save for a holiday in your 20’s?