So your pockets are a little lighter than you’d prefer. It’s okay. It happens to the best of us. Unfortunately though, for most Americans (62 percent), many of us don’t have more than $1,000 in our savings account. Ouch. It’s a tough job being broke sometimes. Yet in moments of financial crisis, like a biological urge, some small part of your brain grabs you by your metaphysical collars, shakes you, and says, “Dude, you really need to start saving.” When this voice creeps in we’re simultaneously presented with two choices: put our debit/credit cards back into our wallets and order water to drink, or order another round of tequila shots! To our detriment, we often choose the latter, dooming our future selves in the process to suffer the consequences of our lack of impulse control. However, rest assured, we’ll be reminded of this crucially important step as soon as we make our next unnecessary purchase—and the cycle will repeat again.
But it doesn’t have to. For your benefit, OmegaFi is here to give you break down the fundamentals of Fraternity Budgeting: 6 Steps to Saving More, and help you keep your fraternity and personal funds safely inside your pocket.
6. Keep Track of Your Spending and Expenses
This rule of thumb should go without saying, but in order to save more, you’re going to need to tack down your spending and expenses. This means keeping an accurate record of what’s coming in and what’s going out. There’s software out there to help you do this, so “I don’t have the time” is never a valid excuse. For personal expenses, a good rule of thumb is to have the associated smartphone for apps for every bank you’re a part of. This will give you an accurate look at your daily spending habits and fundamentally where your money is going and how often. For your fraternity budgeting, you should be checking the chapter bank account on a weekly basis at the very least, whether you’ve had expenditures or not.
5. Create a Budget
Once your spending habits have been observed and defined, it’s time to create a budget. This means looking at how much money you have coming in (for personal finance this can be your monthly income) each semester and tightening the distribution of those funds in order to create savings. Although this is basic personal finance and may seem obvious, unfortunately we all lack the appropriate discipline in spending sometimes. We choose the “present” over the future time and time again, putting off withholding some of our funds for next month’s paycheck or next semester’s dues. In creating a budget, give 10% of your income strictly to savings. Don’t touch it, don’t spend it, and don’t even look at it if you can help it. One of the best tools for facilitating this kind of saving is actually a convenient little app called “Digit” that coordinates a series of micro-transactions based on your income into a virtual savings account. No fuss. No muss.
4. Plan to Save (Make a Savings Goal)
Great so you’ve created a budget. Now it’s time to time designate what you’re saving for. Although it’s always good just to have a little extra in the savings account for emergency purposes, sometimes we need to be a little more specific or our discipline can wane. If you were to say to yourself, “I’d like to have more money in my savings account,” your mind might say, “Fine, we’ll put away 10% of our next paycheck in our savings account.” You put the 10% away and you feel great. The next month, your friends invite you a camping trip. You make plans to go but know you’re going to need to buy the appropriate gear for it. You’re checkings is looking a little light and you don’t want to put it on a credit card, so you dip into your savings figuring you’ll put it back later. You’d be surprised how often this happens and how often people’s bank accounts never exceed a couple hundred dollars or so. The issue is that they haven’t set a clear purpose for why they’re saving, so their discipline is easy to break. Whether you’re saving for a new car, a down-payment on a house, or the rental fee for your fraternity’s formal, set a goal and it’ll give you an extra push to keep your savings funds intact.
3. Priorities, Priorities, Priorities
Priorities in life are everything. In short, they’re direct examples of how we manage our time and our resources. If you can’t prioritize well, you’re destined to waste crucial time and resources on superficial things that often don’t matter as much as the more difficult core issues. Here’s an example: You’ve got three homework assignments for class due tomorrow. The first assignment is quick and relatively fun. It’s a short essay response on a movie you’ve already seen and enjoyed. It’s due at midnight. The second assignment is a lengthier chapter review of about 25 questions. It’s due at 5pm. It’s not painfully difficult, but it’ll take some time. The third assignment is a lengthy 10-page research paper due at 11:59pm the following day. Which do you do first? Although we all might be saying to ourselves “the research paper,” in practice this is often what gets accomplished last. We know we need to do it but the process of getting those heavy gears turning is an exercise of mental exhaustion and self-defeat. We do the easy stuff first because it takes less effort. When it comes to saving, the best practice is to follow the top priorities of your budget: rent, utilities, food, car, etc. Keep those intact and cut the very bottom of the list out if it’s depleting the rest of your budget.
2. Set it up in a Savings Account (Interest Return Is Key)
In life it’s best to make your money work for you. How do you do this? Use it to create more money. Although that might sound easy (it is if you’re good at it), it’s obviously a bit more involved. For instance, if you have $1,000, what do you do with it? Do you chuck it in a savings account and refuse to touch it? Sure, you can, but if it’s with a big bank, you probably won’t make more than .01% interest—a whopping $1 after a year. You could invest it in the stock market which could give you a nice return, but it could also take that $1000 and turn it into $600 if the market turns. The safest route in managing money and letting it make money for you would be putting it in a mutual fund like Vanguard, which can generally give you a 1-2% return. That means $10 to $20 more after a year. Not a bad bet for free money. As Ron Popeil says, “Just set it and forget it.”
1. Look Ma No Hands! (Set Your Savings Up to Happen Automatically)
If you’ve read our previous blog articles on budgeting, you’d know that we’re pretty big fans of the savings app “Digit.” There are few better ways to save money than to for it be done automatically. As we mentioned earlier, the app works to gradually siphon money from your checkings account (the money you might normally blow) and deposit it bit by bit into a virtual savings account. If you were to let the app run its course over a full year, even if you’re living on a teacher’s salary, there’s a good chance you’ll at least save 1-2 thousand by December 31st. This can mean the difference between taking a bus to work when your car breaks down or a vacation to Europe to celebrate a new promotion. It’s always good to have a little extra tucked away somewhere.
Being broke sucks. If you’ve got some tips on Fraternity Budgeting: 6 Steps to Saving More, or just have a funny story of being a struggling college student, let us know in the comments below!