Given inflation’s impact on everyday living expenses, what budgeting tips can young people follow to “live within their means,” and why should they?

First, try keeping housing costs as low as possible, especially now with rent costing more in many places. You can cut housing expenses by getting a roommate. I’ve lived with roommates so that I could lower my housing costs, even though it meant forgoing certain comforts such as privacy. It’s often recommended that people keep housing costs to no more than 30 percent of their gross income.

That budgeting tip is so important to me because of what happened to my husband and me during the pandemic. When we moved to Orlando in the summer of 2019, my husband was employed but I needed to find new employment, though as a schoolteacher, I would still receive summer salary through the end of August. We tried to find an apartment that would cost less than 30 percent of only his salary. I couldn’t find a job as a teacher and ended up selling tickets for a Ferris wheel until I lost that job when the entire attraction shut down because of COVID. Our rent payment was more than one of my husband’s paychecks; if we hadn’t been thoughtful about our how much we were paying for housing, our situation would have been even more difficult when the pandemic shut down started in March 2020.

Embrace the concept that you don’t always need the best or newest thing. You don’t have to keep up with the Joneses. When I was growing up, everyone around me was wearing name brands. When it came time to buy clothes for a school year, my mom would say, “If you want to have those things, I will buy them for you, but you will get much less.” If we would purchase clothes at less expensive stores, she explained, I would have more options and variety.

I’ve carried that with me into my adult life: I drive a 13-year-old vehicle, and my husband drives one that’s 18 years old. When we think about getting new cars, we look at how much money we’re saving by not having a car payment every month.

My final tip is to try to save money long before you need it. Start saving early.

I always tell my friends you must prepare yourselves for “real life”—we’re not young and invincible forever. I was 29 when I had to face a major health issue, and though I had health insurance through my employer, I still ended up racking up thousands of dollars of medical bills. My husband and I weren’t anticipating big bills like that, but fortunately we had savings that allowed us to pay off the medical expenses. Unexpected things happen in life and at some point, everyone can face financial difficulty.

I’m going to be honest: I was much better about budgeting when my income was tighter; I’ve become less mindful as I’ve earned more, and I wouldn’t recommend that. My father’s advice to me was when you make more money, live like you did when you had less. So, for example, have your employer direct deposit a certain amount of your paycheck into a savings account before you even see it, and don’t think of it as money you can spend.

But we have to recognize that not everyone has the same opportunities to budget and save. I keep that in mind when I do outreach to educators and students. People’s financial circumstances vary, and you can’t always tell when they’re going through hard financial times. When we’re working with people whose basic needs are not being met, it’s important we provide financial education that’s relevant and equitable. We can do this by not making assumptions about the way others spend their money and by listening to people’s lived experiences. Quality financial literacy education happens when we seek to build relationships and truly understand our audience.

The Federal Reserve does a lot of work with low- to moderate-income student populations, and the best way we can support the next generation of people making money in our economy is to build their financial literacy at a young age and be mindful of the fact that for some, their first job might be their first experience with financial stability. How do we help the next generation build that understanding of wealth, finance, and budgeting so they are able to build upon their successes?