Start Small Then Grow

Being a recent grad or a young professional can be tough. You’ve got a lot on your plate with your (new) job, social life and on top of that you’ve also got finances to worry about. You’re likely making more now than you’ve ever made before and probably have more bills to pay than ever before too. A lot of times we put personal finance goals or best practices off just because we don’t have time, don’t know how, or just can’t be bothered with it. We put it off and continue to do so until you wake up one day in your mid-20s or even 30s without much to show for. 

Like any goal, getting your finances in order can be mentally tough. It takes discipline and the practice of trying again when you fail. Instead of trying to do it all in one try (for which you’ll likely give up), I’m here to propose that you start small, and then grow over time. 

What to do now

Awesome, if you’re still reading I assume you’re ready to take a baby step towards financial freedom. First thing you should do is figure out your income and expenses (both fixed and generally what you spend). Take stock of what your month normally looks like. After you’ve done that, set some baby step goals for yourself. How’s your emergency fund look? Start by saving $1,000, then build up to 3 months of expenses. Allow this process to take time, start by saving $25, or $50 per paycheck. Once you’re there, start focusing on other goals. Have a 401(k) at work? Contribute at least up to the match, if they offer one. If you don’t you’re just throwing away free money, and who does that? Finally, start building up a savings account, make sure it’s a high yield account (a lot of online banks pay >2%) and save $25, $5, $100 or whatever feels right to you. Congrats you’ve made a budget!

How does that feel? It’s all very doable, especially with small amounts of money. By starting small, you’re not biting off more than you can chew and are setting reasonable goals that you can achieve. 

Why habits will form and stick around

I always say that if you can’t manage a little bit of money, you’ll never be able to manage a lot of money. I hear from a lot of folks that on their current salary it’s just so tough to meet their financial goals and that only if they had more income, then they could be better off financially. Unfortunately, as your income grows, your lifestyle and expenses have a sneaky habit of doing the same. So if you don’t have good habits now, you won’t have good habits later! 

The good news for you is that by following the instructions in step 1, you’ll be wel in your way to good habits. Since we set very manageable goals and you’re more likely to achieve them, they’re more likely to stick around as habits!

Grow with your income 

Hopefully in your job things are going well, and you’ll be getting raises from time to time (an annual raise is fairly common). When you get a raise and your income grows, make it so your saving/investing goals grow as well. Consider this: if you’ve been able to live off your current salary, you don’t fully need all of that raise to continue living and thus you can save/invest some of that money! When you get a raise or other increase in income, be sure to give your saving/investing a raise too! I typically like to devote 50% of my raise to savings/investing and the other 50% goes to my monthly spending budget! 

Celebrate progress

As your savings/investing grows and you meet your financial goals, be sure to take a pause and celebrate. You’ve worked hard, said ‘no’ to things not in the budget, and have been diligent with your savings habit. By celebrating your success and progress, you’ll continue to be motivated to keep the progress moving. You’ll feel refreshed and excited about how far you’ve come, and where you’re heading! 

No matter where you are financially, there’s always room for improvement and regardless of your current standing, anyone can start small, then grow! 

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