SAVINGS TIPS FOR YOUNG ADULTS

Updated: Aug 11, 2019

WHEN YOU START EARNING YOUR SALARY AS A YOUNG ADULT, IT CAN BE SO EASY TO JUST SPEND AND SPLURGE ON ALL THAT LIFE HAS TO OFFER. HOWEVER YOUNG ADULTHOOD IS THE BEST TIME TO START SECURING YOUR FUTURE LITTLE BY LITTLE.

HERE’S A LIST OF 5 SAVINGS TIPS FOR YOUNG ADULTS.

CREATE A BUDGET AND STICK TO IT.

Having a budget gives you the freedom to spend and it’s always important to know where your money is going. Be sure to have a solid budget that includes categories such as income, savings, bills, expenses, entertainment, etc. For the budget to be successful, you have to stick to it and always track expenses so you get a firm grip on spending habits.


START AN EMERGENCY FUND.

Life happens so always be prepared for the unexpected. Start off by building a short-term $1,000 emergency fund to handle immediate situations such as car repairs or replacing a washing machine. Ensure that this cash is liquid and easily accessible via a savings account &/or debit card. This fund will help avoid racking up credit card debt as a last minute resort or scrambling around trying to find money by other means.  

After that you've accomplished that, save toward a long-term emergency fund which consists of 3-6 months of expenses. This can be ready to take action in the event of an unfortunate job loss or having to conduct major house repairs after a hurricane, etc.


SAVE A PORTION OF YOUR SALARY.

According to the famous 50/30/20 rule, you should aim to save 20% of your income each month. Now for some people that may seem like the impossible, especially if you aren't accustomed to saving. I agree that it doesn’t make any sense going into anxiety if you can’t reach that goal right now. However you have to save something. So set aside some time to figure out which percentage works best for you and start there. Be sure not to get complacent and strive to work your way up the savings chain.


JOIN YOUR EMPLOYER'S RETIREMENT PLAN/401K.

You are never too young to start saving for retirement. My advice when starting a new job is to always find out whether your employer offers retirement plans or 401K as a benefit. This is pretty much free money with love from compound interest. If your employer offers to match up to 5% or 10%, make sure contribute to it. Some plans even give the choice of a conservative, balanced or aggressive pension portfolio. Get advice and choose the risk tolerance that’s best for you. The benefits will not be reaped in the short term but when you’re good and ready to retire comfortably, you will be more than happy to have started early. If your company does not offer retirement plans, go to a local investment firm and find out your options.


DEVELOP A PLAN TO ATTACK DEBT.

Be aggressive about paying off your debt. The goal is to be financially free in the long run and to accomplish this you need to ditch debt. Don’t allow credit card bills to spiral out of control and always pay above the minimum on all consumer loans. Make sure you always know your debt totals down to the cent, prioritize them, and decide whether to snowball it or stack it up.

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