Creating a budget on an EA salary, which can range from $8 an hour to $39,000 a year, is not easy. Attempting to stick to that budget in a city where the average rent for a two-bedroom apartment is $4,125 a month is even more challenging (to say the least). Whether you’re trying to make ends meet on a junior editor’s salary or want to know what you’re in for after graduation, Ed is here with expert tips on saving money during your first years on the job.
Write it down
“The number one thing to remember is that it’s impossible to keep track [of your spending] without writing it down somewhere,” says Cheryl Lock, a freelance writer and editor and money expert for LearnVest.com. Although a good old Excel spread sheet will do, Lock suggests using sites like LearnVest.com or Mint.com, which automatically track how much cash is flowing in and where it’s going out. You can also use a helpful app called Level Money that tells you exactly how much you can spend each day and sends notifications when you’re cutting it close, says Catey Hill, a writer, editor, and author of Shoo, Jimmy Choo! The Modern Girls Guide to Spending Less and Saving More. No matter what tool you use, both Hill and Lock agree that you must check your accounts every day or every few days to know where your money is going. Once you’ve got a tracking system in place, Lock suggests giving yourself a month to see how you’re spending and what’s really adding up (we’re looking at you, weekly mani).
Slash and burn
After your month grace period, it’s time to start making cuts. Ed admits this might sting a bit. The first item on the list: rent. “Shrinking your housing payment is the easiest way to cut overall monthly expenses,” Hill says. Ideally, rent should be around 30 percent of your income. If you’re making $2,000 a month, this comes out to about $600. While this isn’t always possible (especially for residents of New York City), Hill suggests living with roommates or moving to more affordable areas of the city to lower the price of the roof over your head. If rent isn’t an issue or you can’t stand schlepping 90 minutes to work, there are other areas you can deduct from your expenses—try honing in on ditching cable and doing less eating out and going out. But this doesn’t mean you have to sit at home and binge watch shows on Netflix every weekend. “One of the best things about living in a big city is that there is a lot of free stuff to do,” says Lock who lives in the city and started her career as an EA at More. Get your friends on board to seek out free community events like festivals, art showings, and outdoor activities. Time Out New York has an especially great assortment of events listed here.
Consider non-negotiables
Although your cable, daily trip to Starbucks, and sushi dinners are on the chopping block, you should consider certain areas of your budget to be fixed expenses. If you’re a freelancer or a temp, be sure to buy your own health insurance. “It’s not at all worth it to play that game,” Lock says. “A health-related emergency will cost you so much more.” (Note that if you are under 26 Obamacare says your parents can choose to keep you on their insurance.) Another non-negotiable is paying off your debt, which should be as much of a priority as paying rent. Hill recommends putting at least 15 percent of your income—or as much as you can afford—towards your credit card or student loan. Obviously you need to eat (those freebies from PR agencies can only go so far), so plan on spending 12 percent of your paycheck on food. For someone making $2000 a month, his comes out to $240 a month or $60 a week. And although trips to the grocery store are obviously essential, Hill says you should always use cash-saving apps such as RedLaser or Grocery IQ to save on items where you can. Finally, make transportation a priority, especially if you’re saving money by living in farther-flung areas. A New York City Metro Card costs about $112 a month (steep, but worth it!).
Invest in your future
If you have enough wiggle room after paying off your fixed expenses, you should try to save 30 percent of your income for emergencies and retirement, Lock says. That may be unrealistic as an EA though,so just try to put at least $1000 into savings. “It will feel good to know you have a little cushion,” Lock promises. Another way to motivate yourself to save is to put labels on your savings accounts. Think about things that are coming up in the future like friends’ weddings, vacations home, and holiday gifts. By putting a little money into each of these every month, you won’t be spending hundreds of dollars all at once. And if you’re lucky enough to be offered a 401k, be sure to sign up as soon as you start your job. “That way the money you save won’t feel like a loss [from your paycheck] because you won’t even notice it’s gone,” Lock says. If you’re freelancing full time or on the side, set aside money for tax time, which is something Lock learned the hard way. “My job was full time freelance but I wasn’t getting taxes taken out of my paycheck,” she says. “Start saving right away because you’ll owe that money later.”
Be credit card savvy
When Hill moved to NYC in 2005, she found herself in some serious credit card debt. “I wanted to live a certain life,” she says. “I thought I would just use my card now and pay it off in the future when I got a better-paying job. But it was a lot harder than I thought.” Her advice: If you can’t pay off your balance every month, don’t use the card. If you can make your scheduled payments, consider applying for a card that can gives your rewards or free money. Lock recommends Capital One for travel rewards and Chase for cash back rewards.
Prepare for a reality check
If you just moved to the Big Apple or plan to take the plunge after graduation, there are a few things you should keep in mind as you plan ahead. “Everything is more expensive here, not just rent. You might need a second job,” Hill says. But on the bright side, Ed thinks it will be worth it. You will eventually start to make more money. Promise.
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