How This Grad Student Saves $1,000 a Month — Is It Worth It?
Written by
Cameron Diiorio
Edited by
Maria Concepcion
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It is a common misconception that younger generations — namely, Gen Z and Millennials — spend too much money and live beyond their means.
“Younger generations value a balance between the traditional ‘hustle’ to save every single penny and using some of their extra income to enjoy life now,” said CNBC.com in an article.
Some young people, such as Cornell graduate student Simon Alford, take penny-pinching to the extreme. Alford saves $1,000 from his graduate school stipend each month.
Here’s how he does it. Is it worth it to be saving such a large portion of a small income?
How Does He Cut Costs?
Alford lives in Ithaca, a smaller city in upstate New York, while attending Cornell University.
“Alford stretches his research-assistant salary — $3,200 a month after taxes — a long way,” said The Wall Street Journal.
Given that the average cost of living in Ithaca is much lower than in larger cities such as New York City, Alford saves on rent simply by where he attends school.
Alford is spending about $750 a month living with two roommates. Additionally, Alford spends around $460 on other expenses such as eating out, gas, groceries and utilities.
While spending on necessities such as food and rent, he puts aside $1,000 monthly into savings and investments. He has two accounts into which he puts money — a Roth IRA and a Fidelity index fund.
Saving vs. Spending
Is it better to live practically and save such as Alford is doing, or is better to spend money as soon as its earned? Younger people, who tend to be fairly uneducated regarding personal finance, are more likely to act out of impulsivity and spend money as soon as their paychecks come through.
So, being frugal may have an emotional cost. Though maybe more practical and economical in the long run, aggressively saving on a small budget can lead to missed opportunities.
“Instead of saving $1,000 a month, [Alford’s] current average, he might drop to $850 or $500 because he doesn’t want to miss out on opportunities that tend to come when you’re young, such as more travel and good times with friends,” said The Wall Street Journal in an article.
Ultimately, it is up to the earner how they want to spend their money. Alford himself recognizes that putting aside such a large amount of money each month comes at the loss of making valuable memories.
For young professionals or continuing education students, it may be better to enjoy the now by spending money on traveling, before more pressing responsibilities consume your time.
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