by Pervez Soomar
It is hard enough to pay for four years of school (probably more), but its even harder to live a financially free lifestyle while you are trying to make a huge difference by working for a nonprofit, teaching, coaching, or doing anything else that involves big sacrifices with little financial payoff. Simply put, a financial free lifestyle is being able to do the things you love without having to make major financial sacrifices. According to debt.org, the average student loan debt for a 2014 graduate was $33,000. That doesn’t sound like a lot for someone who lands an investment banking gig at Goldman Sachs right after graduating, but it is a lot for someone working at a local nonprofit for $30,000 per year. Working in the service sector has its ups and downs, but it is definitely possible to continue working and while being financially free.
Oddly enough, the most financially savvy people that I have met have been the people with the lowest salaries. These people have been able to figure out how to live without the things that cause clutter, and instead concentrate on things that bring happiness. These are also the same people that end up having much more money to spend on the things they love.
There are 3 simple strategies that you need to develop in order to make working for a cause easier on your wallet.
1. Decrease your expenses.
The number one mistake that I see young professionals make after they graduate is that they sign a lease for either their own place or a very expensive place right away. Whether you are working for a nonprofit or working as an engineer, you need to either find a roommate(s), or even consider living at home for the first couple of years after graduation. There is no reason to rent a condo downtown or live in a “hip” area while you are just getting started. Not only will you spend more money on rent, you will probably spend more money on going to all the bars and restaurants around you. No friends or family? Craigslist and Roomster are the excellent resources to find roommates. I have personally used both while savings thousands on rent and utilities.
Want to save $100-$150 per month? PACK YOUR LUNCH. If you are struggling to make ends meet, packing your lunch instead of eating out can help. Going out to eat is America’s, and especially Oklahoma’s biggest issue when it comes to health and finance. Addicted to going out for lunch everyday? Start slow and give yourself one “cheat” day per week and then ease yourself into bringing your lunch everyday. Here are 75 easy recipe ideas for lunch so you will never get bored!
Cut the bills. Have cable? Cut it. Use Hulu or Netflix instead. Think you can’t find anything to watch on Netflix and you’d rather watch the new episode of the Kardashians; try a show like Unbreakable Kimmy Schmidt. You will change your mind. Cut your cell phone bill by switching to a company like T-Mobile or Sprint. Both companies offer affordable unlimited plans. They will even pay you to switch! Those are just two out of the many bills you can cut in at least half. Look into what else you are paying for and see where you can save by either switching, or cutting completely.
2. Increase your income. The same financially savvy people with the lowest salaries that I mentioned earlier have all found ways to increase their incomes in various ways. A salary in the service sector can only increase so much. This is why it is important to find a “side gig” or two that can supplement your income. A side gig can not only help you earn more money, it will keep you away from having too much free time. Free time leads to overspending, and overspending leads to broke. What side gig should I chose?
Freelance. Know web design? Order some cheap business cards from Vistaprint or MOO, and start letting friends and family know about your skills. If you are a good writer and have knowledge on a subject, start a blog and offer your services to companies and other websites. Know a lot about nonprofits and accounting? Start offering bookeeping or recordkeeping services. Are you a teacher? Start offering tutoring services on the evenings and weekends. There are freelance opportunities for everything. If you are looking to see what other freelance options are available, check out elance.com.
Like shopping but can’t afford it? Consider getting a part-time job at a clothing store. The great thing about clothing stores is that they are open late, which provide evening hours for people that want to work after 5, and they let employees have great discounts on their clothes! I used to work at Gap during the holidays in school so I could afford to buy holiday presents. Yes, all the presents were from Gap.
3. Develop a game plan to save and pay down debt. It is NEVER impossible to save. I am a firm believer that there is always a way to save. It is important to look at your finances, think about where you can make adjustments, and develop a personal strategy to attack any debt that you may have. I have attached my personal Financial Check Up Template (Download it here) that I use to help me. This template helps you with all three strategies that I mentioned above.
For column C, use your monthly after tax income. After tax income is the amount of money that goes into your bank account after taxes, Social Security, Medicare, retirement, and insurance is taken out.
- Put all of your monthly expenses in the correct fields.
- Use column D if you want to see where you can be if you increase your income by adding side gigs, and decrease your expenses.
- Column E will show you how much you can save.
The template is designed to give you a look into your own financial picture. The goal is to put the excess funds directly into your high interest debt (credit cards, student loans), or directly into your emergency fund/savings.
After you have completed the template, I encourage everyone to create an account on Mint.com. Mint is a great tool that tracks your finances and allows you to track all of your financial accounts such as credit cards, bank accounts, loans, brokerage accounts and more. You can also set up budgets for anything. Mint will send you emails anytime there is unusual activity in any of your accounts or when you are overspending!
A great resource for Oklahoma residents that either need financial guidance with such things as bankruptcy and credit card debt, or just want to learn more about healthy financial practices, is the nonprofit Consumer Credit Counseling Service of Central Oklahoma.
It doesn’t matter how much money you make. There is always a route to financial freedom and I highly encourage all of you to take the first step by following my three strategies.
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