I’ve taught more than 4,000 students how to manage their money. They almost always think that saving money = not having fun.
I’ve spoken to thousands of students through my company, Don’t Freak Out!, and almost all of them think that if they’re saving their money then they can’t be spending on going out or having fun. This is a big misconception.
I’m going to give you 5 steps that you can take now to save some serious dough this summer.
Step 1: Figure Out Your Disposable Income
This is the easy part. Figure out how much money you have coming in regularly that is disposable (meaning money you can use that isn’t going to necessary expenses).
For example, if you’re going to work 20 hours / week this summer and are making the new minimum wage of $14 / hour, you’re going to bring in about $280 / week. This works out to about $1,120 / month. We’ll call this your total monthly income.
Let’s say your only monthly expense is a phone bill for $50 / month. This would total to $50 in expenses that you have to pay each month.
Assuming you had no other necessary expenses (meaning things you absolutely have to pay each month), your disposable income would be $1,070 / month. We got this number by subtracting your total necessary expenses from your total monthly income.
Step 4: Watch Your Savings Grow (& Don’t Touch It!!)
Once you have this transfer set up, you are all set up to successfully save a ton of money over the summer.
Let’s take a look at how much money you could save this summer. If you started on July 1st, working 20 hours / week until September 1st, this is how much money you would save:
$756 saved by the end of two short months! That’s enough to pay for all of your textbooks for first year. Pretty awesome, right?
Now, I hate to be that guy, but here’s how much you would have if you saved 50% of your total monthly income instead of 30%:
$1,260! That’s enough to pay for all of your first year textbooks and half of your second year textbooks. I’ll leave the receipts on the table for you to collect…
Step 5: Enjoy your summer
I want to make this abundantly clear: with this 30% model, you still have more than enough spare funds to spend on fun excursions, clothes, and food (obviously).
How much, you ask? Let’s take a look at how much disposable income you still have over the entire summer:
There you have it. Over 9 weeks, you would have a total of $1,652 to spend on whatever the heck you want. Not only do you get a phat amount of money to spend on McDonald’s and fidget spinners, you are still saving almost $1,000 for your future. That, my friends, is called responsible adulting.