In your 20s, the trick to saving money is more about forming money saving habits than it is about physically saving a large amount.
Money’s very personal, which is why saving is easier for some than others. In fact, saving has nearly nothing to do with an actual income amount. It’s about habits. That’s why in your 20s, when you’re probably not making a surplus over what covers your bills, it can be tough to start saving. But, simply adjusting the habit of saving it’s what’s important right now. Not the physical amount.
What’s the number one key to saving your 20s?
It’s building the habit and adopting the mentality that:
No amount is too small to save
I often read that saving 10% of your income is the minimum you should save. But, if that isn’t feasible, don’t be discouraged to save 5% of your income. Or, 1% of your income! Anything is better than nothing. It’s about building the habit of saving. Remember, saving isn’t all about putting some money you earn away. It can also be through cutting out expenses.
Here are some easy ways to start saving money today.
You can implement these money-saving strategies at the beginning of a “goal period” (I plan my goals quarterly, so I implement one or two of these each quarter). This way, you can test out the waters with them and if they’re too difficult, you can change them! They’re worth a try.
1. Set up direct deposit from checking to savings (even if it’s small)
If you aren’t able to automatically transfer 25% of your income to your savings, then just set it up to automatically transfer what you can afford, even if it’s 5% of your income (or 1%!). The point is to get into the habit and set up automatic systems of saving on autopilot. Set a reminder in your calendar to reevaluate how that feels in 3 months and then up that percentage, if things are manageable.
2. Cancel Spotify or Netflix
Paying $10/month for TV and music is probably not necessary. I got rid of cable and my TV and though I wasn’t happy at first, I’ve been pleasantly surprised at how much more productive I’ve been. Just like any habit in life, it’s hard when you first cut it out. But, after a couple days, you pretty much stop thinking about it. And of course, if you do really miss it, you can always reorder it! It’s worth trying to go without it.
3. Automate your credit card payments
I’ve heard millennials say that they can’t set this up because they worry they physically won’t have enough in their account at the time to pay a given bill. But, that’s dangerous territory! Credit card interest is very high and very expensive. You don’t want to have to pay it. To ensure money is constantly in the account that my bills are paid from, I link my Venmo account (an essential app in your 20s) to that account. This way, whenever I have Venmo money to cash out, it automatically goes to that account and there’s always a cushion.
(Read more about how I make the most of Venmo here).
Whatever method you need to use to ensure you have a cash cushion, set it up today! You do not want to be charged with credit card interest, it’s way too expensive.
4. Set up reoccurring check payments to parents or friends
If you don’t have the self-discipline to leave your savings alone, then send your money elsewhere each month. Online banking allows you to set up automated “bill pay” systems so that they send a check for you monthly. Have that check sent to your parents or a good friend and then let them stash it away. If they don’t cash it, then there’s no risk of them spending it. But, the money is taken out of your account when you send it, so you won’t budget it in when you look at your account online. It’s like an “out of sight, out of mind” savings.
5. Cancel your gym membership
Another common myth I hear from millennials is that their gym membership is an essential expense. News flash: it’s not. If you can afford it, that’s great. You obviously need to stay healthy. But, don’t lie to yourself by saying it’s as essential as your rent or other bills.
I recently canceled my gym membership to save money. I loved the gym, so it was tough. But, I bought these weights and this Zumba video (which I’m obsessed with), and together that cost me about one month’s gym membership. So I just saved 11 months of a monthly gym payment!
Could I have afforded the membership fees for the years? Sure. It’s not about that. I canceled my membership to continue building habits of frugality and saving.
Building the habit
These are a few simple suggestions for building that habit of saving money, no matter how small the amount is. However you see fit to build that habit within you, take action today. You’ll never regret saving.
Everyone has a personal way to budget, and I’m no financial expert, so I’m not going to dive into the best way. For me personally, I don’t need to budget every little thing, because I’ve developed a good sense for what I can and can’t afford. However, I do monthly lay out my essential expenses first and spend after that. When I’m extremely saving money (hello holiday season!), I do keep track of everything I buy.
Below is the exact spreadsheet I use monthly to keep track of my expenses and budget. It’s my masterpiece. It includes everything so you can kiss the stress of overspending away.
What are some of your favorite saving money ways?