Brooklyn resident Elena Haskins is paying off $11,000 in student loans while living in one of the most expensive cities in the world. But the 23-year-old graphic designer is making it work on a $50,000 salary.
She lives "comfortably," she tells CNBC Make It, and even manages to save about $900 a month. "It's an expensive city, but I think if you know where your money is going and you recognize what your priorities are, it's totally doable."
Haskins, who moved to New York City after graduating from Ithaca College in the spring of 2018, saves $330 in her SIMPLE IRA, a tax-deferred employer-sponsored retirement plan, and $550 in her high-yield savings account. Plus, her company offers a match on her IRA.
She's able to set aside so much thanks to a simple strategy: She's automated everything. As soon as her paycheck hits her bank account, a percentage of it goes straight to savings before she even sees it. "I like to live my life with the least amount of money available to me," says Haskins. "I put it away in savings automatically so I don't have access to it."
With her IRA, like most employer-sponsored plans, her company automatically sends a percentage of her paycheck to the account. As for her high-yield savings account, she set up recurring transfers from her checking account, so the day after her paycheck lands, $550 goes straight to savings.
Haskins has even taken it a step further and set up specific savings buckets within the high-yield account — there's one for travel-related expenses, one for emergencies and one for gifts and donations — and a certain percentage of her $550 of monthly savings goes to each category. The emergency bucket gets the biggest chunk.
What Haskins likes about automating her savings is that it eliminates the temptation to spend now. "It's out of sight, out of mind," she tells Make It. "I don't feel like I have all this money to spend because I look at my [checking] account and think, I don't have a lot of money. And then I spend less."
Anyone can automate their savings: Simply link your accounts so that a specific amount of money goes from your checking account to your savings account, and set up the exact day you want to make transfers. You can also automatically pay your student loans, which Haskins does, and credit cards.
In addition to simplifying your life and freeing up mental energy, you'll never forget a payment or be tempted to skimp on savings.
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