How do I save money in my 20’s?
Being in your 20’s is definitely a double-edged sword.
On one end, you have the freedom to live your life as you wish. Whether that be to travel the world, work towards becoming a professional scuba diver or go to medical school.
On the other, the hardships of the economy have hit millennials and Gen X’ers pretty hard resulting in higher student loans, lower paid jobs, less job opportunities – basically, it’s much harder to be a young person as opposed to when your parents were your age.
Since we’re in a time where young people need to be self-aware of their finances more than ever, we need to talk about – saving!
Here are some topics to consider and put into action right away to secure your future and also be more financially responsible in the present.
Open up specific savings accounts.
We are long passed the days of your parents opening up a chequing account for you when you got your first job at the mall working retail (can anyone else relate?).
Now in your 20’s, you need to put your savings away in a place that can accumulate interest and defer you from those pesky taxes.
Lucky for you, HomeHow has got you covered on the important factors of a RRSP account. Don’t know what that is? Check it out here.
Other options that you should consider opening include:
- Emergency Fund
- Tax Free Savings Account (TFSA)
- High Interest Savings Account
- Mutual Funds
Save a percentage (%) of your income.
Look at your current income and determine how much you can put away into your savings without any repercussions. If you can’t narrow down on a single number, start with 1%.
Let’s say you’re making around $4,000 a month and you want to save 1% of that income.
1% of 4,000 = $40
This amount may not seem like a lot of money at first but, if you keep putting away that $40 every month for 6 months, you will eventually have around $250 nesting in your account.
If you rely on tips or commission instead of salary, you can also put aside a percentage of that money into a secure account at a credited bank.
Please don’t stash hundreds of dollars in your Homes! Put it somewhere safe!
Once you’re comfortable with taking that money and storing it for later purposes, you can definitely increase how much you put in every month.
Stick to your budget… for real this time.
I’m sure this isn’t the first time you have someone telling you to make a budget and it won’t be the last. We want you to realize that your budget is serious business and it should hold strong throughout the entire year.
- Stag/Stagette Parties
- End of Semester Bashes
- Weekend Getaways
- Parties – of any kind!
We’re not telling you that you shouldn’t go to these events BUT, keep your budget in mind!
It’s very easy to lose focus when your best friend’s going-away party is on the weekend and everyone has decided to rent a limo, go to the club, grab pizza on the way home and share Uber rides home which adds to a very pricey night, a wicked hangover and also some scrambling to get “back on track.”
It is advantageous to learn how to survive on less than what you actually need. We are suggesting that you can treat yo’ self on occasion – not every weekend.
Start paying off your credit card & stop increasing your credit limit.
You know what I’m talking about. You’re about to hit your limit and instead of taking the hit, you increase the limit further and further until you realize you’re in a bit of a hole.
Make the change today. Stop using your credit card for recreational purposes. ONLY use your card for priority payments such as car insurance, phone bill, utility bills, etc.
Put that card on ice. Literally. There’s a Google tutorial for you right here.
When is the last time you read a book in order to help YOU out. No, this isn’t a mandatory novel you have to read and analyze for your senior-level poetry class. This is a book that was created to guide you into the right direction – financially.
Since the majority of us didn’t learn much about personal finance in school. It is our responsibility to do it ourselves – you know, like adults.
Here are a couple of books both written by US and Canadian authors about the tribulations of money.
Title: Worry-Free Money
Author: Shannon Lee Simmons
Title: Wealthing like Rabbits
Author: Robert R. Brown
Title: Broke Millennial
Author: Erin Lowry
Work, work, work .. towards a rewarding goal for yourself.
Yes, we need to work to pay our bills, feed ourselves and have a roof over our heads. BUT, we also work so we can go to the movies on the weekends, buy that ridiculously priced video game that was released last month or plan a getaway with our significant others.
It is possible to do both, you just have to be smart about it.
Depending on how you manage your money, there is usually some kind of a “save” account versus a “spending” account.
While you’re working hard to increase that savings account, don’t forget that the spending account can get some lovin’ to.
Write out specific statements and place them at your desk at work or on the fridge at Home so you can be reminded of what you are working for.
(ex. By December 2019, I will have enough money to take my partner on a 5-day vacation to Hawaii)
I’m sure at this point, twenty-somethings are sick and tired of other people telling them how to live their life and how to save their money. I totally get it. However, there is always a moment where young people will search for answers whether that be on the Internet or with their family members.
We just want to be ready when those moments happen.
Do you have any advice for young people in their 20’s on how to save money? We would love to hear about your insights.