Save money now, so you can fire your boss later

Saving money is a challenge for most Americans, but it can be particularly difficult for young people.

They're likely to have student loans. They entered the job market during the Great Recession or in its aftermath, which means they're either struggling to find a job or may be earning less than they should be. The cost of renting an apartment is higher than ever. They're constantly bombarded with Instagram posts of other 20-somethings enjoying a fancy meal or hanging out on exotic beaches and, with retirement decades away, it can be hard to find the motivation and discipline to save instead of joining your friends at a pricey exercise class or happy hour.

But an attention-grabbing, expletive-ridden blog post published last week provides a good reason for young people to make sure they have some money saved right now — to be able to tell a terrible boss, no-good significant other or horrible roommate to get lost. (Be warned, the blog post uses far more colorful language than that.)

In the piece, published on personal finance site, the Billfold, MFA candidate and writing teacher, Paulette Perhach describes her journey from someone who regularly splurged on clothes and drinks and dinners out to someone who took an extra job and scrimped so she could pay off her student loans and afford to walk away from situations she didn't want to be in.

There were some harrowing experiences along the way, Perhach, 33, said. A job where she was sexually harassed and "I just could not afford to tell this guy to…" (Perhach followed with an expletive that translates to "go away.") She stayed in some bad relationships simply because it was easier to "talk myself into it rather than calculate myself out of it," and Peace Corps service in Paraguay which provided a needed dose of reality and made it easier to give us some small luxuries.

Perhach's story provides a real-life cautionary tale (albeit one with a happy ending) for 20-somethings who would rather take a taxi or buy lunch out than put that money in a savings account, said Stefanie O'Connell, the author of a personal finance blog, called "The Broke and Beautiful Life" and a book by the same name.

"There's nothing more valuable than that freedom to walk toward your own better future on your own terms," O'Connell, 29, said. "It's peace of mind that today's 20-year-olds need and are craving," in such an unstable job market.

Inspired? Here are some tips on how to start your own "Freedom Fund" (again, Perhach described her own savings in more colorful language):

Get emotionally connected to your finances: O'Connell suggests 20-somethings get in the habit of taking stock of their finances and visualizing what an extra $1,000 or even $10,000 in savings could mean for them. Is extra money a ticket out of a crappy apartment? Disappointing job? Or will it pay tuition for graduate school? Having a sense of how money can influence your freedom will increase your motivation to save, she said.

Figure out exactly how much you need to live the life you want: Visualizing your life after you've saved enough to leave your job will help you figure out exactly how much money you need to save and what it will take to reach your savings goal, said says Shannon McLay, the founder and president of the Financial Gym.

Find a way to hold yourself accountable: At the beginning of her savings journey, Perhach set up a blog that she shared with her family and several of her close friends. Perhach said her best friend's mother checked it regularly and she kept saving in part simply because she didn't want to disappoint her.

Spend as if you've already quit your job: By cutting back before you quit your job you can both figure out how to live your life in a way that your savings can support and save money at the same time, says McLay. People can usually find space to cut back on food and personal care, said McLay, who advises clients on budgeting, saving and investing.

Automate your savings: Make sure a portion of every paycheck is automatically deposited into your savings account, even if you can only afford to stash away 5%, O'Connell said.

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Use an online savings account: An online savings account is a good place to build that cushion, O'Connell says. That's because you want the money to be liquid, so it's not tied up in a retirement or other investment accounts if you need to access it quickly. An online savings account is also easy to check and manage and will typically allow you to build a little bit of interest. Most important, "it's not so accessible that you can spend it with a swipe of your credit card," O'Connell said.

Always be looking to make more money: Whether that's a "side-hustle" like the waitressing job Perhach took while she was working another 9 to 5 job or simply asking for a raise at your primary job, more money can help you put your savings into "overdrive," O'Connell said.

Once you have that money, re-evaluate your savings goals: If you're making more money, take a look the amount you're automatically sending to your savings account and see if you can afford to send more, O'Connell said. It's best to devote some of that extra money to savings before you get used to spending it.

Regularly check up on your finances and don't be afraid to geek out: Perhach, who describes herself as "terrible with money" uses Excel spreadsheets and online budgeting tools like Mint.com to help manage her savings.

Source: Save money now, so you can fire your boss later