Money Saving Tips for 20-Somethings
Saving money in your 20s can be one of the hardest tasks to conquer. When you’re in your 20s, you are entering the world of bills and tax returns, along with slowly learning how to budget. Maybe you don’t need those LuluLemon leggings afterall…
The first thing that must be established is a budget plan. Make a list of how much all of your expenses will be, and set aside money each month for those purposes. Consider utilities, rent, groceries, car payments, and of course some fun activities. Learning how to budget will save you stress at the end of the month and will help you enter the adult world with less pressure. Consider an online budgeting tool like Mint.com to help get all your finances in order and better plan.
Another way to ensure that you always have money, is to come up with a debt plan as well. Learning to pay back your debt is something that will effect your future in a positive, or negative way. Not paying debt back properly now, can have harsh effects on your future that you will greatly regret. Learn how to reduce your debt and come up with a plan that you will execute that will allow you to slowly pay back debt, while still having extra money left over.
It’s important to have a back up plan, and back up funds. Make sure to dedicate a chunk of every single pay check to an emergency fund. We suggest splitting your direct deposit by putting something (even $50) into your savings each pay period. If you’re paid twice a month, that’s $1200 at the end of the year. These funds can be dipped into if you are short on rent one month, or if any other emergencies come up. If you need new tires, or need to pay medical bills, or get your car fixed, this is where your emergency funds will come into action.
Another thing that might be the last thing on a 20-something’s mind is retirement. It may seem like a million years away, but your future self will thank your “now self” for being so responsible and saving. If you are in your 20’s and save at least $100-$150 a month, you’ll have a very generous fund by the time you are ready to retire. How much you save is up to you. If you have a 401K at work, you should be putting something aside (especially if your employer matches your contribution). Setup an IRA (roth or traditional) and start investing. Mutual funds are a great entry point, but you should seek advice from a qualified professional to find out what’s right for you. By properly investing and taking advantage of compound interest, your savings will grow over time.
For every 20-something, it is important to save. Start with small steps, allowing you to slowly build a savings that makes you feel comfortable. It’s hard starting from nothing, but everyone needs to start somewhere.