Millennials have enough to worry about, but the idea of how to save money as a millennial is a conversation that needs to happen.
First off, I’m beginning to despise the term “millennial”. It seems like the only people who are actually using that term are the older generation berating us younger folks for our lifestyle choices, selfies, and our “me, me, me” attitude.
But, the fact is, we are millennials and unfortunately, things are not easy for us with the current status of the economy. Let me hit you with some facts:
1. Millennials earn 20% less income than our parents did.
2. Student loan debt for millennials has doubled compared to recent generations. There is now more student loan debt than credit card debt.
3. 1/3 of millennials between 18 – 34 live at home still (most-likely due to efforts to save money).
4. The millennial generation has the highest rate of unemployment in 30 years.
5. Millennials get married later in life and have children later due to financial and career struggles.
But, let’s not forget about the positives.
1. Millennials are the most generous generation of all time when it comes to charity.
2. We are more likely to purchase a product that donates proceeds to a good cause.
4. We are an extremely educated generation with over 60% carrying bachelors degrees.
5. Many millennials have started side businesses to grow into their own full-time business.
6. We are innovative. Facebook, Instagram, Snapchat, just to name a few.
To clarify, the millennial generation is anyone born between the years 1982 – 2002. As a millennial myself (born in 1992), I get very defensive when people say negative things about my generation because most people fail to realize that we are struggling.
Currently, most millennials believe that social security won’t even be around by the time we retire and media outlets have labeled us as “hopeless” and “unlucky” because of our economic situation. Clearly, us millennials have a long way to go.
Now, here’s the big question: how to save money as a millennial? How do we get ahead of the financial struggle we face and ultimately beat the statistics? If I had to choose the first step, it would be to save, save, save.
I began to seriously save money the day I graduated college with my undergrad degree. I was determined to pay off my student loan debt ($30,000) within 2 years.
And guess what, I did it.
I learned a lot in my two years of saving and have been asked on numerous occasions exactly how I did it. While this post isn’t about saving to pay off student loans, many of the tactics I used have continued to help me in my savings for future items.
Now, I have a very solid and automated savings routine and have found great success with using the following tips on how to save money as a millennial:
For more shocking statistics on millennials, check out: Millennials May Have a Serious Debt Problem
1. Save for a Goal
I really learned how to save when I began to save toward my student loan debt. I set a deadline for myself and figured out how much money I needed to save per month in order to reach that goal.
It was during this time that I learned the true art of self-control and determination. I was completely dedicated to my goal and did everything I could to reach it.
I learned that having a goal was what truly ignited my journey. Since I don’t like to fail or quit, I made up my mind to succeed at it.
So, set a goal for your savings. Some popular big item goals to save for as a millennial, aside from student loan debt, includes saving for a wedding, car, house, or vacation.
2. Set Financial Goals
Similar to saving for a goal, this is the next more detailed step and is vital in how to save money as a millennial. Let’s say you’re saving for a downpayment on a house. In order to make your goal more realistic, break down your financial goals towards that downpayment. Start by answering a few questions:
– How much do you need to save?
– When do you want to meet your savings goal?
– How much do you need to save per month in order to reach your goal?
– Are your goals realistic?
This step may take some actual math and effort on your end to ensure you come up with accurate numbers. However, if you map it all out at the beginning of your journey, it sets you up to actively and aggressively save money as a millennial.
Related: Guide to Millennial Investing
3. Control and Limit
Easier said than done, but, control and limit your spending habits. This doesn’t mean cut out everything, but to successfully save money as a millennial, here are a few areas that could use more control and limit:
– Eat out less
– Don’t shop every sale ‘just because’
– Stop buying the newest tech gadgets when your current one works just fine
These little things add up, especially if done frequently. A large part of saving is to remember that you have a goal and need to stay on track in order to reach that goal. It might seem difficult at first, but once you train yourself to have more self-control, it will get way easier.
Recommended: Millennials May Have a Serious Debt Problem
4. Don’t. Touch. Your. Savings.
I mean it! No touchy! The only time you should even consider dipping into your savings is when you’ve successfully saved for a goal and are ready to make a purchase.
Savings accounts should not be treated like checking accounts. Instead of taping into your savings when you want to buy something a little more expensive, set aside money for short-term savings for that item.
For example, while I was paying off my student loan debt, I knew I wanted a new phone. I saved money for about five months to be able to purchase my phone all while still saving what I needed to meet my debt goal.
It’s better to view your savings account as something you absolutely cannot touch until you reach your goal. Trust me, you’ll reach your goal faster this way.
5. Multiple Banks
Consider setting up your savings account at a different bank than your checking account. While some banks might work well for a checking account with the benefits they offer, typically the savings account only offers 0.01% of interest.
Because of this, it pays to have a savings account at a separate bank so that you can get the best deal on interest rates. I personally have three different banks to maximize the way I divvy up my money.
Another tip to save money as a millennial is to set up your savings so that you can only make withdrawals in person. This takes away the temptation of transferring funds from your checking to your saving through online banking. The less temptation, the more money saved.
6. No More Avocado Toast!
I’m joking. Avocado toast is delicious. (If you don’t know the joke I’m referencing, read about it here. Trust me. This millionaire’s financial advice to millennials is ridiculously hilarious).
I’m definitely not suggesting you give up avocado toast in order to save money as a millennial, but I do think that in order to save money as a millennial, some cutbacks need to happen. Small tweaks here and there in your spending add up.
Just like it’s easy to spend money extremely fast when you have a moderate to exciting social life, it’s just as easy to save money when you cut back. Here are some areas to consider cutting back in order to optimize your savings:
– Bring lunch to work, especially if your current habit is to eat out for every meal. Bringing a lunch to work is not only healthier, it could literally save hundreds each month. In fact, I talked to a friend who admitted she spends upwards of $700 a month eating out because she never brings her lunch to work. I probably spend $30 a week on lunch groceries, and that lasts all week. Packing a lunch is way more economical on your wallet.
– Make your own coffee. American’s spend on average $1,100 a year on coffee. That’s a lot. Invest in a coffee maker and make your coffee at home.
– Curl your own lashes. Okay, ladies (and gentlemen). Eyelash extensions are crazy expensive and require refills every 2 – 3 weeks. I know it takes longer to curl your eyelashes with an eyelash curler, but it’s literally hundreds and hundreds of dollars cheaper to do it yourself than to spend upwards of $100 a month on extensions. Remember, to reach your goal by your deadline, cuts need to happen. Cut out the expensive eyelash extensions.
– Do your own mani/pedis’s: Again, doing it yourself may not be as lavish, but it will save you money and help you reach your goal sooner.
– Workout at home: Gym memberships, pilates classes, and yoga are all pricy. While you’re building up for your savings, do your workouts at home. There are plenty of YouTube videos to help with at home workouts in case you feel lost.
– Matinee movies/movies from home: I love watching movies, but prices are rather pricey these days. If there is a movie I really want to see, I catch a matinee showing because it’s literally half the ticket price. Otherwise, I watch movies at home from Netflix since I’m already paying for that.
– Cheaper dates: If you’re in a relationship, switch to more affordable dates. If you like each other, you’ll still have a great time. There’s no need to spend a ton of money each time you go out.
Recommended: Millennials May Have a Serious Debt Problem
7. Pay Off Your Debts
I know this sounds counterproductive, but in the long run, it saves you money. The real reason I wanted to pay off my student loan debt in 2 years was so I could avoid the interest rates. If I had taken the full 10 years to pay off my debt, I would have paid an estimated $10,000 in interest alone.
The same goes for any kind of debt. Interest rates can make you pay way more than what you purchased your item for. So, even though you are still saving money, continue to pay down any debt you may have. Once that’s all paid off, it will make saving money that much sweeter.
8. Enjoy Company Without Spending
There’s no need to stop hanging out with friends just because you’re saving money. When I was paying down my debt, all my friends knew I was on a tight budget. When we would hang out, it was totally normal for me to just enjoy their company without purchasing anything.
It felt weird at first going to a restaurant and not eating, but I didn’t lose any friends by doing this and I saved money. Besides, if you need to spend money in order to keep friends, maybe you need new friends!
9. Save Aggressively from Each Paycheck
In order to meet my previous financial goals, I was saving between 70% – 80% of each paycheck. Now that I’ve met my goal and I’m saving for a wedding and a house, I’m currently saving an average of 60% of each paycheck.
The only way it’s possible for me to save this much and still make all my bill payments is because I was able to set up a solid budget plan. This makes it a no-brainer for me with each paycheck. I know exactly where my money will go and I have never had any issues with overdrafting or not having enough money.
Recommended: Millennials May Have a Serious Debt Problem
10. Roth IRA
A lot of millennials are going the non-traditional’ route of working for themselves. If you fall into that category, make sure you still have a retirement savings. After speaking in depth with a financial advisor, I’ve come to the conclusion that a Roth IRA is a great route to go in order to have plenty saved for a retirement.
However, do your research and talk to a trusted financial advisor to learn what the best account is for you when it comes to retirement. There are plenty of options out there to take advantage of.
There you have it, how to save money as a millennial. Just know that it is possible, even with the economic crisis we face. Each tip listed above is possible and achievable with a little determination and effort. A few years from now, you’ll be glad you started your saving journey today.