By Philip Joens
In my last post I talked about my own experiences after graduating from college and how I’ve come to terms with the business side of my life as a reporter. When you’re young and not making much money though, it may be helpful to choose carefully where you’ll live and what you do in your free time.
Save Money, save for retirement young
When you enter the workforce a few things in mind: you probably won’t make much money in your first few jobs, but you should start saving for retirement at a young.
Still, it’s important that you start saving for retirement while you’re young. Take this example from bankrate.com’s Leslie Haggin Geary.
“Consider this scenario: If you begin saving for retirement at 25, putting away $2,000 a year for just 40 years, you’ll have around $560,000, assuming earnings grow at 8 percent annually. Now, let’s say you wait until you’re 35 to start saving. You put away the same $2,000 a year, but for three decades instead, and earnings grow at 8 percent a year. When you’re 65 you’ll wind up with around $245,000 — less than half the money.”
Rent and Buy Wisely
When you’re young, think about where it may be prudent to live. Before moving anywhere, do your homework and think about the long-term affordability of that place. Unsurprisingly apartments with the highest rents sit along the coasts.
Rents in Manhattan average $3,497 per month Average rents in San Francisco sit even higher at $3,809 per month according to rent data aggregator Rent Jungle. Just a one bedroom apartment will run San Francisco residents $3,368 per month on average according to Rent Jungle.
Rents in Sunny Southern California are cheaper, but still much higher than the national average of $1,250 according to a monthly report compiled by apartment list.com.
Compare those high rates to average rental prices in Kansas City, Mo., which averaged just $963 per month according to Rent Jungle.
When considering a moving, it may also help to think about where homes are affordable as well. While your rent may simply disappear at the end of each month, homes are investments that can pay for themselves after several years of payments.
While Los Angeles may be big market, middle class residents may have a tough time finding an affordable home there. In the second quarter of 2015 the California Association of Realtors conducted a study and found that a family earning the then Los Angeles County median family income of $54,510 could afford a home costing $275,530. At the time though the median-priced home cost 436,010; or 58 percent more.
In San Francisco the study found that families earning $75,910 could only afford homes costing $383,670, compared to the then average median home price of $1.2 million.
Meanwhile, Kansas City residents earned a median income of $45,821 in 2015 according to the U.S. Census Bureau, but the median home in Kansas City cost just $133,400 at the time.
Last year the non-profit Tax Foundation came up with a good indicator of the difference in the cost of living in each state. The group took 2014 data from the Bureau of Economic Analysis and showed how much $100 is really worth in each state.
Their findings show $100 is worth the most in Mississsippi where it really has a value of about $114 and worth the least in Washington D.C. where it has a value of about $84.
Earn Two Incomes
Jay Leno had a reputation for being thrifty. Even while making $30 million per year, the former “Tonight Show” host claims he never touched his primary salary. Instead, he’s always worked two jobs, using one salary to live off of and banking the other according to CNBC.
“”When I got ‘The Tonight Show,’ I always made sure I did 150 [comedy show] gigs a year so I never had to touch the principal,” Leno told CNBC. “I’ve never touched a dime of my ‘Tonight Show’ money. Ever.”
“”So many people get to be the age I’m at now and they’ve got nothing because they just blew it all,” Leno told CNBC. “I put my money in a hammock and say, ‘You relax. I’m going to go work.’ And when I come back, I put some more money in the pile.
“If everything ends tomorrow, I know I’ll be fine.”
You may not need to take things to such extremes, but it still may be helpful to earn a second income that covers your grocery, TV or student loan bills each month. In my free time I try to officiate youth and high school sports. Most high schools pay umpires $90-$100 for each baseball and softball game officiated.
Even picking up a few hours per week at retail stores like JCPenny if you have time can help pay the bills.
