YES! There are many obstacles to saving. Especially for young college students. We all struggle with the circus-like balancing act of treating ourselves vs saving. However, there is always wiggle room to save. Even when you are eating expired ramen and shopping at thrift stores. We all have expenses we can cut back on (or cut out entirely). The first thing you should do is sit down and analyze your spending habits. Yeah, I know this is not what you want to do during your free time. But trust me, you will be glad you did. What you can cut back on to save some pennies will be clear as day.

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Debt free?

Now, what to do with this seemingly unlimited amount of cash flow you just freed up by budgeting? Take those pennies you saved by going from a venti to a grande (or brewing your own coffee at your place) and start saving.

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Have debts?

We all know basic savings accounts will earn you next to nothing in interest right now. So, pay off any debts you have that are charging more interest than what you could earn in a savings account. For example, you may have a car loan with an interest rate of 9% or a credit card with a rate of 20%. Pay off the higher interest accounts first. Even if you are making regular payments, you could pay off debts early and save a nice chunk of change on interest. You should always use your extra income to pay off any debts such as these first. You would be losing money if you were putting money into a savings account earning less than 1% interest while carrying a balance on debts such as these.

Starting from the bottom?

If you are not too financially secure, try to start with a savings rule for yourself. Most banks allow you to create automatic transfers to your savings account. Try your hardest not to do any quick transfers to buy the new 90s throwback trend. Act like that money in the savings account is not your money. Keep it OSOM (outta site outta mind). Start there and if you NEED it for backup it will be there waiting for you.

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Savings priority numero uno

Regardless of who you are or how much you make, the first priority of saving is to have a safety net. This is an accessible savings account with 3-6 months worth of income. Come up with a number that would allow you to live with NO income for the next 3-6 months. This means enough to pay for rent, food, internet, phone, debt payments, etc. This stash of cash can be put into a traditional savings account or a money market fund. Money market funds are a simple way to earn a little more interest and keep your money more accessible.

Compounding interest is king

Next objective is to save and earn money while you sleep! There are a few solid options to make this happen. A money market fund (MMF), an Individual Retirement Account (IRA), or invest directly into the stock market. IRAs are obviously meant to save for retirement. So that is not your money, it is old you’s money (OSOM). For beginners, experts recommend investing in stock and bond funds. Keep your investments diversified (stocks, bonds, foreign markets, etc.). Start these accounts as early as you can in order to earn as much as possible from compounding interest. There are companies that provide these accounts with low fees and deposit requirements. You can also set up an automated deposit to keep your account growing. I’ve barely scratched the surface on the many investment options available. This can all become tricky and confusing very quickly. If you don’t know what you are doing I highly recommend researching or talking with a qualified professional first. Even a small difference in fees or interest rates can really set back your potential earnings from compounding interest.

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GOALS

We all have different goals and risk tolerance with our money so what you do with your savings is up to you. Just make informed decisions and stay active with your accounts. Not saving, as well as having thousands of dollars sitting in a regular savings account are equally detrimental to your savings potential.

• Recommended reading: Get a Financial Life: Personal Finance in Your Twenties and Thirties by Beth Kobliner

• Recommended investment company: Charles Schwab (also a boatload of information on their site)

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Want to hear more from Jordan?

Check him out on Twitter. Jordan V. is 26 years old, a husband, stay at home dad, and full time student at the University of Wisconsin-Milwaukee in the Urban Studies Program. He is also a former personal banker.