Saving money is a good idea whatever age you are, though it is especially important for young adults who are looking towards their future and hoping to realize plans. When we are in our 20s, we may be content to rent an apartment but as we begin to enter the third decade of our lives, property ownership has many benefits. We may look to settle down with a partner and have children; all of these things require financial planning and foresight.
In the long term, there is retirement to consider. Even if you have just started out on the career ladder, it is always worth paying due consideration to your future well-being. Whatever your reasons for saving money as a young adult, it is essential to have a structured plan that you can follow.
In this blog post, we will highlight the seven best money-saving tips for adults. Building healthy financial habits at an early age serves your future self and allows you to realize those ambitions and plans that you hold for yourself. If you are a young adult looking for information on how to save money, read on.
1. Make A Budget (And Stick to It!)
If you have entered the workplace for the first time as a young adult after graduating, it’s easy to look at your salary as something completely disposable. While it is certainly recommended to treat yourself to a good standard of living and to reward yourself for all of your hard work, it can be all too easy to overspend. You may be earning a good salary but still end up living paycheck to paycheck—without being altogether sure how.
By making a budget, you’ll be able to measure out your income into different categories. You can set money aside for regular expenses such as rent, transport costs, and food. Another portion of your income should be saved (as we’ll see later on, it’s recommended to save at least 20% of your income).
Then, you’ll also be able to have a ‘disposable’ sum of money that can be used for recreational and entertainment purposes. If you are planning for a holiday in the coming months, you can also factor this into your budget.
2. Learn Self-Control
The Stanford marshmallow experiment was a 1972 study on delayed gratification and it’s worth highlighting here. In the studies, four-year-old children were offered a marshmallow. The rule was that they could eat one marshmallow immediately or, if they waited for 15 minutes (with the one marshmallow sitting tantalizingly in front of them), they could have two marshmallows.
The study later found that those who held out for the larger reward had more success as adults. They were more likely to complete college, earn higher degrees, and were less likely to be overweight than the children who choose instant gratification.
You can take a lot from this study, including the benefits of learning self-control. If you are a young adult, the one marshmallow in the study might be a new car or expensive clothes in real life. By practicing self-control, you can have two marshmallows in the future—which represents greater financial opportunity and everything that comes with it.
3. Know Exactly What Your Expenses Are
There’s a good chance that you know what your monthly rent is or how much you spend on transport costs. But there are many smaller expenses that can be hidden from our conscious—and these can add up.
One good tip is to hang on to every receipt you get from a store, whether it’s a food store, a clothing store, or any other kind of business. Also, be sure to keep track of your online purchases. Add all of your weekly or monthly expenses together and take a look at the kind of items you are buying and ask yourself if you can’t make some savings here and there.
You may even come across expenses that are being automatically debited from your bank account that you forgot about. When you understand your weekly or monthly expenses, it’s far easier to trim some of the non-essentials and save that money instead.
4. Make a Rainy Day Fund
A rainy day fund, also known as an emergency fund, helps to protect you in the event of some unexpected financial blow. This can help you from going into debt, which can unbalance any progress that you have been making. A rainy day fund helps to avoid bad debt down the line, protect yourself from job loss, health expenses, emergency pet care, car repairs, and more.
If you do run into an unexpected financial issue, another solid option is a short-term loan. The advantages of a short term loan include:
- They are easier to acquire compared to long-term loans
- They can quickly help you out of a financial issue
- There is a shorter time for incurring interest
For example, online personal loans from Credito do not require a credit check and the application form can be completed in five minutes. You will have access to your money on the same day as you apply and repayment times are short (90 to 120 days). Loans of between $500 to $850 are available.
5. Save 20 Percent of Your Income
There is a good rule of thumb to follow when it comes to saving money. It’s called the “50/20/30 budget rule”. The idea with this rule is that you divide your income (after tax) into three different portions—50 percent for your living essentials, 30 percent for your discretionary spending, and the remaining 20 percent should be saved.
It’s a useful rule to follow and helps with your weekly or monthly budgeting. The 20 percent can include adding money to a rainy day fund, a savings account, investing in the stock market, and contributing to an RRSP. The earlier you begin saving, the more comfortable you will be in the future, particularly when your retirement starts to come into view.
On the whole, 20 percent is a very manageable amount; with a discretionary budget of 30 percent, you certainly won’t have to live a frugal lifestyle in order to start building a pot of savings for the future. The “50/20/30 budget rule” is one of the most effective budgeting tips for young adults.
6. Lower Your Biggest Expenses
Your biggest expenses as a young adult are likely to be housing, transportation, and food. Take a look at each of these in turn and see if it’s possible to reduce your usual spending. For instance, downsizing to a smaller residence or moving to a more affordable area is a big way in which to reduce your monthly spending.
If you drive or commute to work via public transport, you may be in a position to save by cycling or walking instead. This won’t be possible for everyone, but there could well be opportunities to cut down on transportation costs (and get some more exercise!).
Finally, when it comes to food, you’ll be able to get a good handle on your usual spending by studying your receipts. Meal prepping and cooking meals in bulk at the start of the week can help to cut down on costs, particularly as you will be less likely to grab takeout or stop off in a restaurant or cafe.
7. Invest In Yourself
Sometimes, you should spend money to make money. By investing in yourself and your ongoing education, you can acquire and develop useful new skills that will help you in the future. Investing in your education is a sensible, long-term strategy and it doesn’t have to be expensive.
There are plenty of great and affordable courses online that you can complete part-time. These additional skills and qualifications can help to make you more hirable and boost your income as you get older.
The Best Money-Saving Tips for Young Adults
Saving money as a young adult is a sensible choice and the above best money-saving tips are designed to simplify the process for you. Even if you are just starting out in your career, learning smart saving techniques at this age will help you throughout the coming decades. By saving today with these tips for saving money, you are increasing the quality of life you can have in the future when you start making big decisions such as buying property and starting a family.
Here at Creito, you can get a short-term cash loan without ever leaving your home. All of your information is 100 percent confidential, you can get your money within 24 hours, and there is no credit check (so don’t worry if you have bad credit). Best of all, we believe in rewarding our most loyal customers with lower interest rates for your second and third loans.
Contact our team today to learn more.