Hello! I'm a college freshman who makes money mainly off of online tasks. I'm unable to get a job due to my busy schedule, but I've amassed upwards of a thousand dollars in a few months. How should I allocate finances best for the long run? I've set aside 20% for personal spending, 15% for gifts, 15% for beermoney resources (new phones and the like), 25% for short-term savings and 25% for long-term savings. How solid are my percentages? Should I allocate more into savings? If so, how much and in which section? How can I invest my money to gain interest over time? Thank you for all the advice in advance.
You are saving about 50% of what you earn. That itself is great. You could save more if you wanted to. Cut the amount of money you spend on beer and gifts. Allocate about 10% of your total earnings to beer and gifts because you'll need to reward yourself from time to time. Save the rest. It might not appear like much at the present but think of it as building a foundation. Once you get used to saving your money thusly when you get a better job you'll won't be spending more money simply because you earn more.
Thank you so much! I really value this input. And I think I'm going to cut gifts to 5% and allocate that much into "beermoney" resources. I'm not ACTUALLY buying beer with it, haha. Beermoney is just a term to describe money earned through online rewards sites such as Swagbucks and Perk. By allocating more money there, I'll be able to make more with the purchase of new phones and hardware to run money-making apps. Thank you so much!
Since you're still young, you could open a time deposit account. The gains are guaranteed and fixed on the condition you don't withdraw the amount you invested throughout a stated period of time. A TD investment is also less risky compared to investing in stocks and bonds. Consider picking a good mutual fund with the aid and guidance of a trusted financial counsellor, but be prepared for the risk. The good thing about mutual funds is that you're not required to invest a big amount such as when you invest in stocks and bonds. From the looks of it, though, you've pretty much figured everything out. Carry on with your plan. Set aside more money for savings only after you have a stable career. For now just be more creative with your investments. Varying your income sources will help you in the long run.
Follow the 80/20 rule. Always save 80% of your income and put them into a savings account, time-deposit account, mutual funds, stocks, or any other investment vehicle that you jumpstart your portfolio. The 20% for spending is more than enough in my opinion to get you through the month. If it's too low then adjust accordingly. I've always been a firm believer of delayed gratification. I know that I don't need to get a hold of the latest gadgets, drive the latest cars, or eat in the most expensive restaurants. What I need to do while I'm young is to use my time wisely on things that will help me in future. I still have fun every once in a while though because the stress becomes too big when left unattended and it can affect my work and my productivity.
You're a clever man for the simple fact that you're saving money while young instead of spending it all like everyone else does. To be honest I'd say that you're doing just fine, saving 50% is great right now, especially considering that you're a college student, and life isn't cheap.
