Savings on a shoestring

Key takeaways:

• As a young professional, it’s important to start actively managing finances in order to save money.
• By setting priorities, expenses can be trimmed and saving can begin.
• A variety of tools can empower you to efficiently save money for short-term goals and the distant future.

Being a young professional can be rough. Your first job out of college provides invaluable real-world experience, but probably doesn’t pay much. You have rent to pay and student loans to pay off. It’s no wonder that borrowers in the U.S. collectively have more than $1.5 trillion in student loans.

On top of all that, your friends like to socialize and go out, but prices are drastically higher than your former college hangouts. Despite this, there is always room to save! With these tips, saving money is possible – even on a tight budget. (Don’t have a budget? Start here.)

• Define your goals: Before you start to save, you should figure out some basics. What are you saving for? How much do you want to save, and where are you at in reaching that goal? This is typically a good conversation to have with your banker. From there, your banker can help you start planning some next steps. The Goal Savings account at MidWestOne can help save toward a specific goal, you can add to the account as often as you want as long as cumulative deposits total at least $25 each month.
• Bank Your Change: This program is a simple way to save money when you use your MidWestOne debit card (both debit and credit transactions). Each time you use it, the amount is rounded up to the next whole dollar and the difference is automatically deposited into your savings account. For example, if you pay $3.22 for a coffee, it’s rounded up to $4.00, and that extra 78 cents is deposited into your savings account.
• Live below your means: This may sound like a no-brainer, but it’s extremely important if you want to save money. This is where that budget becomes critical. If you can’t make ends meet, consider how you can save money. Maybe you need a roommate or perhaps you should stop eating out at lunch every day. Consider the changes you can make to live under the amount of money you make.
• Budget for saving: When you set aside your rent, utilities, loan payments and any other monthly payments, also plan to put a fixed amount in your savings account. Whatever is left over can be used as your spending money. This forces you to make saving a habit.
• Actively participate in your finances: Don’t let your bank account shock you. Actively monitor how much you’re spending in comparison to how much you’re making. It’s okay to not tackle it alone. Develop a relationship of trust and open communication with your banker to help understand how to better manage your finances and save for the future.
• Start saving for retirement: Retirement may seem irrelevant when you’re just starting your career, but it won’t seem that way in the future. The sooner you can start saving for your retirement, the better. The first step? Enroll in your employer’s 401(k) retirement plan. Most employers match a certain percentage of what you set aside, which means you could be leaving money on the table if you don’t enroll. If your employer does not offer a retirement plan, open an IRA or Roth IRA yourself.
• Prioritize your expenses: Decipher what is most important to you. You can’t do it all. Social media may make it seem like your fresh-out-of-college friends are doing it all on their own, but that’s more than likely false. Wanting to take a special vacation? Then don’t eat out for the next three months. Make small daily sacrifices in order to spend your money on what you truly want.
• Earn interest: Make your savings go further by earning interest. Compare savings accounts, and talk with your banker to see which savings account is best for you.

By setting priorities and actively managing your finances, you can start saving now. If you have questions about how you can save money in the short-term and long-term, visit your local MidWestOne branch.

MidWestOne Bank does not provide tax, legal or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any transaction.