Millennials and Zoomers are all about earning big and retiring early. Who doesn’t want to spend their golden years exploring new countries or living in peace?
Despite that, 32% of Generation Z have nothing in their retirement savings. We’re all familiar with the hard truth that saving is a lot harder than it sounds. With groceries, rent, and utility bills piling up every month, it can be difficult to even think about saving for retirement.
That’s why we’ve compiled these smart saving strategies to help you build wealth. Read on to discover more and how you can start working toward financial freedom, no matter your income.
1. Understand Your Financial Capacity
Saving isn’t as simple as putting money away as soon as you get your paycheck. Even if you do put money into your savings, you may end up needing it for groceries or something else. This can happen if you don’t have a good understanding of your finances.
Start by looking at how much you earn and how much you’re spending on what. Take note of everything that you pay for, including housing, transportation, and grocery shopping. Small day-to-day expenses can add up quickly.
Your daily coffee could be hindering you from reaching your financial goals. Looking at real numbers can help you make more achievable goals. It can also help you identify what you need to change to start growing a nest egg.
Make a Budget
Now that you have the real numbers, it’s time to set a budget. Many people start with the 50/20/30 rule. This states that 50% of your income goes to needs, 30% for wants, and 20% for savings.
However, you don’t have to adhere to this. The 50/30/20 rule doesn’t work for everyone due to different circumstances of financial duties. Find a balance that is sustainable for your needs.
2. Prioritize Paying Debt
75% of Canadians are struggling with debt, and it’s affecting their ability to save. Monthly interest can quickly grow out of hand. Soon, you’ll end up with an impossible debt to pay back.
Focus on paying high-interest debt to build a more solid foundation for your savings. If you own a credit card, you can’t get by with only minimum payments. If possible, add on extra payments to prevent your debt from growing.
This can also boost your credit score, which gives you more financial opportunities in the future. If you think your credit card is too difficult to manage, consider debt consolidation.
Talk to a Financial Advisor
If you don’t know where to start, consult a financial advisor. Financial advisors can take a deep dive into your finances and come up with a plan to meet your goals. They can help you make more informed decisions, saving you time and money in the long run.
3. Rethink Your Spending Habits
Once you’ve assessed your income and spending habits, you may have realized you’re spending too much on coffee or eating out. These expenses may feel small, but that’s why they fly under the radar so easily.
Start by looking at monthly subscriptions that you don’t use. This can include your gym membership or streaming platforms like Netflix or Hulu.
Next, look at those tiny daily expenses. If you usually eat out during your lunch breaks, it may be time to consider packing home meals. If you spend too much on cab rides or gas, consider public transportation or carpooling if possible.
You’ll find that these small changes can grant you a lot more flexibility in your finances. You can then put those extra expenses in your savings or towards paying off debt.
4. Find Extra Income
Building wealth isn’t possible with only one source of income. Reducing expenses can help, but it won’t be enough if you want to achieve financial freedom. In addition, there’s a limit to what you can cut down on without sacrificing your quality of life.
One excellent way to nurse your financial health is by increasing your income. Negotiate with your company to increase your salary. If you feel like you’ve done what you can at your current job, it may be time to look at broader horizons.
Find a Side-Hustle
Put your unique skill set to use by looking for a side job. If you’re good with pets or babies, offer sitting services. If you’re good with Photoshop or illustration, look for freelance work.
The best part about our economy today is that there’s always a market for something. You can take a short-term course to bling out your resume. You can even start a small business selling food, crafts, or art.
Invest in Your Future
Investing is a great way to earn passive income but keep in mind that your money won’t grow overnight. Many people make money off stocks by being patient and doing market research.
With various forms of online payment, it can be difficult to keep track of how much you’re spending. Paying with one click or swipe takes away the thought process. Once you have a weekly budget, carry only the amount you need in cash.
5. Automate Savings
Remembering to set money aside for your savings can be difficult if you haven’t yet mastered smart spending. Remedy this by setting up an automated transfer to your savings account.
Start with an amount that you’re comfortable with. Don’t go all in and limit your expenditures to only the bare necessities. This is a quick path to burnout, and it won’t help with financial worry.
You deserve to live a full life, but you also need to prepare yourself for the future. You can increase the amount when you’re more comfortable with your spending habits.
Smart Saving Habits to Start Today
Life is too short to worry about money, so try these smart saving habits. Developing good habits will help you in the long run, and you’ll still be able to indulge on a night out or shopping every once in a while.
If you’re looking for payday loan alternatives, look no further than Credito. We understand that life comes with unexpected surprises, and some of those surprises involve money. Apply for a loan today!