When you are young and worried about bills, saving money may seem like an impossible task. It can be easy to use your paycheck to get by monthly and not to save any penny. But putting money aside can make a world of difference.
Here are simple pointers to learn that can help young adults save money. These practical money-saving tips can help Gen Zers and young Millennials get started on the path to financial success.
1. Practice Self-Control
If you are fortunate, your parents taught you the value of delayed gratification and self-control. If not, remember that the sooner you learn this lesson, the sooner you can keep your finances in order.
One way to exercise financial self-control is by waiting until you save enough money before buying whatever you need. Another way is using a debit card instead of a credit card when buying everyday purchases.
A credit card can be a high-interest loan if you do not have the money to pay off the monthly balance. So use a debit card, which deducts your expenses from your checking account without additional charges.
Although a credit card can be useful, it comes with risky disadvantages if you are not careful. If you want to use one, use it to your advantage, not the lender’s advantage.
2. Start Saving Early
If you are unsure how much you should save, a good rule of thumb is to put aside one-third of your income. Doing so can make it easy for you to survive future financial hardships, such as car repairs, loss of employment, home repairs, and other emergency expenses.
3. Follow a Budget
It is understandable for younger people to struggle to make a budget and stick to it. But, after getting a job and earning a decent income, you need to fix up a budget if you want to be financially independent.
You must pay the bills, save for emergencies, and factor in weekly expenses, like food and gas. Although there should be room for discretionary spending, you still need to establish a budget if you want to refrain from spending more than you can afford.
4. Start an Emergency Fund
You need an emergency fund, or you may end up having to turn to your parents for financial help. Although they may be willing to bail you out, this practice may still be an unhealthy habit to develop.
Start saving for an emergency fund because you may need it if your roommate suddenly moves out, you need to move to a new place, or you get laid off.
A good rule is to save 10 percent of your earnings for a rainy day fund. Keep contributing until you have saved up about three to six months of your expenses.
5. Pay Debts
Debt is a real problem for most young adults. Student loans may be enough to weigh you down for many years, but add credit card debt to that, and you might be paying off debt for much longer.
You do not want to be paying a debt for most of your adult life, so plan how you will pay your loans. Whether you have a payday loan from GoDay or a loan from a bank, try to think of how you can pay the debt as soon as possible.
Do not dismiss the debt, and simply resign yourself to the fact that this particular problem will always be there. Be aggressive about paying off your debts. Consider a repayment plan or loan forgiveness if you have a student loan.
These are five effective money-saving strategies for young adults struggling to save cash. With these helpful tips, you can get started on achieving financial security.