We all know it’s important to save money, but the way that you should save will vary from decade to decade. That’s because your financial needs change over transitional times in your life. Your income and expenses affect your ability and possibly motivation to save. New financial needs come with lifestyle changes, so let’s talk about smart savings tips for young adults.
In your 20s…
You may be earning an entry-level salary, living alone or with roommates, and for the first time, not relying on parents to foot your bills. Likely, you haven’t been concerned with saving money. But there is no better time to start saving than right now.
- Create a Budget – Be sure to include bills you have to pay, weekly expenses like food and gas, along with an emergency fund.
- Establish an Emergency Fund – Start contributing now to an emergency fund. This is for a rainy day. It’s always a great habit to have money set aside for an emergency.
- Contribute to a 401k – Retirement may be a long ways off, but contributing to your 401k is building your financial future. It is a great idea to set aside whatever your employer is willing to match.
- Don’t Drown in Debt – Now is the time to start tackling those student loans. Be aggressive and seek financial advice for a repayment plan.
- Practice Self Control – Qualify for a credit card? Cool. It’s wise to pay your balance in full, follow your budget and live within your means.
In your 30s…
You may have gone through major life changes, like buying a home, getting married, or having children. You are probably more settled, earning more money, and more motivated to save.
- Reassess and Adjust Your Budget – It’s important to adjust your budget with any major life change. New job? New mortgage? New family? Reassess your expenses and adjust your budget accordingly.
- Grow Your Savings – Make your savings work for you! By putting your money in a savings account or money market, your money can actually accrue interest and make you more money.
- Plan for Retirement – Placing 10-15% of your earnings into your 401k is ideal. Consider this to be the cornerstone to a solid, financial future.
- Pay Off Debt – Hopefully you set up a repayment plan in your 20s and can now focus on eliminating your debt altogether.
- Advance Your Career – One way to save more is to make more! Evaluate your position and ask yourself, could I do more to move up here?
