Doing without in your 20s -- by choice
Posted
Aug 27 2008, 12:28 PM
by
Donna Freedman
Rating:
It's tough to be frugal in your 20s, according to a Smart Spending message board reader posting as "byebyestudentloans." Your peers seem to spend most of their time in malls, restaurants and nightclubs. And you?
"I'm brown-bagging my lunch, limiting my driving, work a full-time and part-time job," says the reader, who contributes to a 401(k) and has two other financial goals: pay off student loans and save to build a home. And all in the next two years.
That's a lot to accomplish, and burnout is a very real possibility. That's why byebyestudentloans was looking for support from other message board readers. "I know that at some point, I'm going to get very frustrated, but I need to keep myself motivated. … Any thoughts or suggestions to keep myself on track?"
A number of readers, some of whom are also in their 20s, came through with advice that echoed my own thoughts: A person is responsible only for his own choices, rather than what everyone else does, and as such should not be swayed by other people's opinions about frugality. Five or 10 years from now, those free-spenders will be wishing they'd been half as cautious with their funds.
Spreadsheet or cash only?
The first step to saving is to understand your spending. Track all expenses, develop a budget and stick to it no matter what, advises "Jimmy281," who bought his first house at 24 and put every penny he earned toward the mortgage and paying down debt. Now he's 28 and married; the college loans have been repaid, they own two cars outright (one new, one used), and they live below their means and thus accrue no consumer debt. They're saving for a 20% down payment on a bigger place, to be bought within two years.
He and his wife track every expense, even those under a dollar, on a spreadsheet. This may seem hard but it becomes second nature, Jimmy says, and is a good way "to keep a close eye on your spending/money and to develop good habits."
"Bluebrd13," another 20-something, watches those day-to-day dollars too. The reader uses a rewards credit card and each week adds up money spent, then transfers that amount into an online account set up solely for credit card payments. This ensures payment in full each month and also "keeps me more aware" of spending patterns, Bluebrd says.
A cash-only system works for "Lucy650." She allows herself $100 every two weeks for fun money, and "after the cash is gone, I stop spending."
Fun money can be for whatever you want. For reader "Lehughe2," fun is eating out once a week as "a break from cooking and packing lunches," while keeping a bigger goal in mind: saving for a down payment on a home.
A frugal night out
Frugality does not mean never having any fun, readers note. Boredom and frustration can lead to overspending. Instead, frugalists should find ways to socialize on a budget.
For reader "Fencing Foil," age 26, that means things like poker night (with chips, not cash), potluck barbecues, exercise sessions and any free event in the area. Game nights (look for board games in thrift stores), book clubs, themed potlucks and even fondue parties are big hits with other readers.
Having people over doesn't have to cost a lot. You can do what "TheBlackDrop" does: Serve whatever beer is in the fridge and make snacks from what's at hand. For her, entertaining at home is better "than sitting in a noisy bar, not having any sort of decent conversation because you can't hear each other, spending a ton of money and then having to drive home afterward."
And if you do want to go to a noisy bar? Go ahead -- but stay within your budget. "I've spent many fun nights out with friends (at) bars and clubs just drinking water," says reader "Degas Fan," who points out that if you don't booze it up, you don't have to pay for a taxi.
"Family in Portland" also drinks water or diet soda when out with friends, and orders the cheaper appetizers -- and a separate check. "I have been (shafted) by 'Let's split it evenly' at the end of the night when I spent less than $10 and they spent $50."
Cheap food and drink can be had at happy hours, and "Laughing in Indy" notes that some chain restaurants have special deals or discounts for repeat customers. She's gotten $10 discounts, free food and even a free bottle of wine for an anniversary. Indy and her husband also hit the free wine or beer tastings at local wineries and "nicer" liquor stores.
Finding inexpensive ways to socialize is important, according to Bluebrd13; otherwise, longtime pals might feel rejected. This reader's weekly coffee date with friends is an affordable alternative to "a downtown club or a movie or something you can't afford."
Here are a few links about alternatives to traditional socializing:
• "5 ways to dodge peer pressure to spend," from partner blog Wise Bread.
• "Friends and money: coping with social spending situations," from partner blog Get Rich Slowly.
• "Is frugality an either/or?" from I Pick Up Pennies. (Full disclosure: This site is run by my daughter, an occasional contributor to Smart Spending.)
Staying motivated to stay the course
Reader "Great Arm" suggests setting short- as well as long-term financial goals. Big-picture dreams like homeownership or paying off student loans "seem so hazy and far away." Short-term goals keep Great Arm motivated during the "slow but sure" progress on major life goals.
Those short-term goals are encouraging during temporary financial setbacks, according to "Library Goddess." Her summer of weddings cost way more than expected (gifts, travel, throwing a shower) and this fall she's going back to school (fees, books, the part of tuition not covered by her employer).
But instead of being discouraged, she's focusing on the fact that her emergency fund is "finally halfway to goal, after a two-year struggle to get it there." Like Great Arm, she believes in celebrating smaller accomplishments while plugging away at big-ticket dreams.
Object lessons
Those larger goals are well worth the sacrifice, according to "rich daughter." Yes, it was hard for her to "see my friends and siblings taking trips and driving fancy cars, having the latest technology" while she lived a pared-down lifestyle. But it paid off: At age 25, she's about to move into her first home.
"I don't make a lot of money," the reader says. "I am just careful with the money I have."
Jimmy281 notes that friends who spend are creating two sets of problems: debt plus a "spending mindset" that will keep debts coming. TheBlackDrop writes of acquaintances who buy designer handbags, luxury cars and other items but who "get very quiet" when topics like down payments or retirement come up.
Object lessons like these can offset the teasing of friends who think you're "cheap" -- friends who think that debt is not only normal, but inevitable, and that you're cheating yourself by staying on a budget.
Byebyestudentloans, I hope you can stay true to your goals. Picture your debt-free future. Picture your secure retirement. Most of all, picture yourself two years down the road, inviting all those spendthrifts to your housewarming party.
