Photo by Alli Brounley

The art of saving money has become somewhat extinct for Gen Y. As young adults exploring new careers and wanting to lead “adult social lives”, there’s a big discrepancy between our earnings as a young employee and the way we perceive that we should be living – usually way above our means.

Attempting to hold down a swank lifestyle without being able to financially back it leads down a rocky path of instability and a lack of preparedness for financial emergencies. For those people who are more interested in the financial here and now, that lack of planning is going to come back to bite them in the ass.

How do you take care of this problem and start building up that nest egg? The first step is to change your way of thinking. A lot can be said for learning how to properly budget within your financial means. And believe it or not, watching your money grow from a meager little amount to a fat little pile of cash is a lot of fun – and will motivate you to keep saving more. We should be doling out generous payments to ourselves every month. Here are 5 steps that will boost that savings from zero to $10K in one year.

1. Set up a savings account with at least a 3% APY. Check out ING direct (an online bank) for a nice 3% APY rate. And HSBC is also offering a great 3.5% APY right now for their online savings accounts.

2. Set up a recurring automatic debit for $400 a month. That means doling out $200 a paycheck to yourself. Have it automatically debited from your account to get you used to having it pulled each month. After a while, you won’t even notice that it’s gone because you’ll have gotten used to living on a smaller percentage of your paycheck.

3. Cancel your cable and add that extra $60 a month to your savings account. If you’ve read some of my earlier posts, you’ll know that I think cable is a huge waste of money when there are so many excellent video streaming websites online. Hulu offers great shows and it won’t cost you a cent.

4. Plan your Grocery Shopping out to the last Dime. Focusing on how much money you’re spending on food is a great way to save big. I recently slashed my food spending by a third by writing out clear grocery lists and sticking to them. Let’s say that you take my advice and save $200 a month on food. That’s an extra $2,400 a year that can go into savings.

5. Move into an affordable apartment. This is the one that New Yorkers hate. Why? Because it usually means leaving the hip neighborhood with all the great bars – the ones that drain your pocketbook because they’re so close by. I had to seriously re-evaluate my living situation a few years ago when I was paying $1,050 to rent a small bedroom in a trendy Manhattan neighborhood. Now, I’m happily sharing a much larger three bedroom house in Brooklyn for $640 a month. Talk about some savings. Let’s estimate that you’re paying $900 a month for a room in Manhattan. By taking a share for $700 a month, there’s another $2,400 in annual savings.

Total Annual Savings: $10,320 – not including accrued interest from the savings account.

Related posts:

1. 4 Fail-Proof Ways to make and Save Thousands of Dollars a Year on Craigslist
2. Jeanette Pavini Dishes on Where to Save and Where to Splurge During the Holidays