After talking to thousands of people about student loan debt, early financial mistakes, and things they wish they would have done, I've found that one thing is always clear: They wish they had developed great financial habits earlier.
Starting out in any new career after years in college is an exciting step in life. After receiving an undergrad and most likely a masters and/or doctoral degree, the first few months of employment for psychology professionals is a huge relief.
Not to mention—you feel like you're rich! Going from eating ramen noodles to making thousands of dollars a month is a massive shift in lifestyle.
However, you have to be careful not to fall in the trap of "lifestyle inflation," which is the very common process of living at or above your means as you make more money. Understanding how to effectively save money and avoid lifestyle inflation is one of the most important financial concepts to master early on in your career.
Here are 5 ways to become a great saver:
1. Set clear goals for your future
Whether it's buying a house, saving for an early retirement, or setting aside seed money for your own firm, the goals you make are key to success with saving. Just like anything else in life, having a plan will make the journey easier.
Unfortunately, too many people go through the motions of earning and spending for the first half of their career, only to have to play catch up later on. According to the Department of Labor, every 10 years that you don't save for retirement will require three times as much saving to get back on track.
As soon as you can, sit down and make a detailed and actionable set of goals for your career and life in general. You'll need short-term goals, medium-term goals, and long-term goals.
2. Start with an emergency fund
Whether you have student loan debt from college or not, setting aside an emergency fund is unbelievably important. A healthy emergency fund needs to be at least three to six months of after-tax salary (many personal finance experts are even beginning to prefer as much as eight months).
This money needs to be as easily accessible as possible, and generally needs to be held in a "safe" account that won't be affected by swings in the market. A normal savings account will do, but also be sure to keep an eye on potential high-yield savings accounts as the Fed begins to raise interest rates in the near future.
The reason for the emergency fund is simple—it keeps you from having to max out a credit card or apply for a personal loan when something goes wrong. Accruing any kind of consumer debt, especially the high-interest variety that's associated with credit cards, can be an absolute killer of your ability to save money every month.
3. Automate whenever possible
There's enough to think about in the beginning phases of your career, which is why automating your savings is an effective tool. As technology has improved vastly over the past few years, so has the ability to set aside money every month without even thinking about it.
Most major banks allow customers the ability to set up automated transfers into multiple accounts. For example, if you'd like to save for a down payment on your house as well as a vacation, you can set up two different accounts and have money automatically transfer whenever you'd like.
Don't think that the automated transfers needs to be huge amounts, either; just $50 per month over the course of a year will turn into $600 over 12 months!
4. Consider buying a used car instead of a new one
One of the biggest mistakes I see from people that are just starting their career is spending too much too fast. Remember—lenders want to loan you the most money possible for cars and houses. The bigger the amount and longer the terms of the loan, the more of your money they put in their pockets.
Don't rush out to buy a new car just because you can afford the monthly payment. Far too often, people just starting out want to "reward" themselves or show their friends on Facebook that they are successful with their new job.
The problem is that the reward feeling fades and after the social media likes and "congrats!" comments fade, you have a large car payment that will weigh you down financially for as many as seven years.
Consider buying a used car or even saving to buy an older car with cash (for reference, I drive a $6,000 2004 Yukon and make well over $100,000 a year).
The money that you save from driving a slightly older vehicle can be a nice supplement to your emergency fund, down payment on a house, or brokerage account.
5. Join a financial community
The reality is that saving money sucks (I hate to break it to you, but it's true). It's one of the least fun parts of personal finance, but it's arguably the most important. One of the easiest ways to keep yourself motivated to save money and get ahead financially is to find a community of people that have similar financial goals as you.
There are plenty of great personal finance blogs, podcasts, and YouTube channels that will keep you both entertained and informed on all of the great things you can do with the money that you set aside every month.
Be sure to actively seek out a financial community and participate as much as possible. Your bank accounts will thank you later!
-- Bobby Hoyt is a former high school teacher who paid off $40,000 of student loan debt in a year and a half. He now runs the personal finance site MillennialMoneyMan.com full-time, and has been seen on CNBC, Forbes, Business Insider, Reuters, Marketwatch, and many other major publications.