Becoming an independent young adult is a dream in our teenage years.
We dream about living on our own, having the perfect career, and becoming financially successful.
I’m going to guess that becoming financially successful is probably your #1. Right?
So how do we get there? How do we become financially successful?
Unfortunately, we don’t learn about money in school or from our parents. Most of the time, we learn as we go, and in the process making costly mistakes.
With that said, the following saving tips are intended to set you up for financial success. I’m here to guide you and encourage you. You can become financially successful with the right guidance.
Saving Tips For Young Adults
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Tip #1 – Learn To Budget.
Budgeting is all about taking 100% control of your money.
It doesn’t matter if you make; $35,000, $45,000 or even $100,000. A budget is important at any stage.
The ultimate goal of budgeting is to ensure you’re not living above your means, saving enough for your future, and budgeting for future big purchases like a house or car.
If you don’t have a budget, create one. If you do have a budget, make sure you are budgeting the right way.
If you can’t answer the questions below without having to look up the answers, then you definitely need a budget.
- What’s your monthly income?
- How much do you spend each month on fixed expenses?
- How much money could you save each month?
- What percentage of your income do you invest in retirement?
Tip #2 – Keep Your Debt Low.
Always remember to keep your debt low. As a young adult, your first big debt will probably be your student loans. I recommend that before you take on any other debt (car or mortgage), finish paying off your student loans FIRST.
The biggest problem with debt is interest. The more debt you have, the more interest you pay.
Interest is the money you pay your lender when borrowing money.
If you do have student loans, calculate your total interest payment if you stick to the current payment schedule.
The answer will surprise you, trust me. It’s just not real until you see the number. Make the effort to check so that IT IS REAL.
You work really hard for your money. The last thing you want to do is give your money to the bank.
Do everything you can to keep your debt low and only have one debt at a time.
Tip #3 – Build An Emergency Fund.
Emergency funds protect you.
They protect you from unexpected expenses or circumstances.
Unexpected circumstances like losing your job or medical emergency bills. If you lost your job tomorrow, would you have enough to pay your bills? For how long?
Emergencies like these come up so it’s important to be prepared. The last thing you want to do is lose your home or have to borrow money to pay your bills. Remember that loans are expensive and your interest payment will be high.
So how much money should you have in your emergency fund? First, the money in your emergency fund should be money you can withdraw ASAP. It shouldn’t be money in an investment account. As far as how much, you should have enough to cover 3-6 months of your expenses.
For example, if you spend $2,000 a month, then your emergency fund would have between $6,000 – $12,000.
The last thing you want to do is fall behind on your mortgage or rent payment. It’s important to think ahead and build your emergency fund ASAP.
This saving tip for young adults is so important that it’s essential to your future success.
Tip #4 – Learn To Value Experiences Vs Things.
“Things” are expensive. Things include; clothes, accessories, games, souvenirs, appliances, furniture, house décor, holiday décor, etc.
These things pile up quickly and cost you tens of thousands of dollars.
I’m sure you’ve already accumulated a lot of things that you probably could have lived without. It’s okay if you did, but understand that this is money that could have gone towards your investment account or house down payment.
You want to keep most of what you earn right? You don’t want to work until the retirement age of 65 right? Life is too short to work until 65. Learn to spend and live with less.
That being said, it’s still important to enjoy life so instead of buying things, buy experiences and be smart about them.
As I get older, I’m 31 now, I’d much rather spend my money on experiences instead of things. First, as I said earlier, things are expensive. And most of the time, they are things I forget about, have donated, or haven’t gotten much use of them.
Experiences bring value and happiness to your life. They create memories that last a lifetime. Also, they are not expensive when you do your research.
If you’re looking for cheap airfare, try Scott’s Cheap Flights. I traveled to Madrid, Spain for $318. Amazing right?
Tip #5 – Understand The Value Of Your Hour.
How much do you make an hour?
You probably know your salary but after taxes, insurance, and retirement contributions, how much do you really make an hour?
Understanding this number is so important. If something is going to cost you $40, how many hours did you have to work to get it?
It’s important to understand how much time you are giving up for whatever you are thinking about buying. Remember that we can’t buy time. And when we buy, we ultimately buy with our time.
Tip #6 – Build Good Credit.
Do you know your credit score?
Unless you plan on paying for big purchases (home, car, furniture) in cash. It’s important to pay attention to your credit score.
A good credit score is important because it means you’re reliable when it comes to paying back the money you’ve borrowed. Here are some ways to build good credit:
- Always pay your statement balance, not the minimum balance.
- Use your credit card a few times a week. Around 2-3.
- Use 1-2 different credit cards.
- Don’t charge anything you won’t be able to pay back in full in your next statement.
Building good credit will save you a lot of money down the road. Good credit generally means low-interest rates and when your interest rate is low, you pay less interest.
Focusing on building good credit may seem like you’re not saving money but it’s very important. It saves you A LOT of money on future purchases.
Tip #7 – Groceries Are Expensive.
For most Americans, food (groceries and eating out) is our third largest expense.
How much do you spend on food each month?
If someone would’ve told me that groceries were my third largest expense, I wouldn’t have believed them. Until I did the math.
It turns out, food was actually my second largest expense behind my mortgage payment.
I was shocked! I had no idea. But when I did, I gave myself a budget immediately. Now I only spend $35/week or $140/month.
Tip #8 – Learn How To Negotiate.
Negotiating can seem intimidating but it doesn’t have to be. Especially when you hold all the power.
At the end of the day, companies want YOUR money and you do have the power.
Below are examples of what you can negotiate.
- Car insurance
- Cell phone
- Health insurance
- Credit card interest rate
What’s the easiest way to negotiate? Get multiple quotes (aka price) for whatever service you need.
For example, let’s say you need car insurance. Call an agent and see what price they give you. Next, call an agent from a different company and see what price they give you. Always make sure you’re comparing apples to apples. Review the quote details and make sure they are the same.
If you prefer the company with the higher price, let them know that their competitor is offering you a lower price. They will likely match their price to get you as a customer.
It will take a little research but if you take the time, this saving tip for young adults is so important. Learn how to negotiate!
Tip #9 – Find A Hobby.
Have you ever noticed that you tend to buy things when you’re bored? Kind of like when you eat, not because you’re hungry, but because you’re bored?
Find a hobby that keeps you busy and engaged. This will not only be good for your wallet but it will also be good for your mental health. Doing things you truly enjoy makes it easy to be happy.
Also, I highly recommend finding a reasonable hobby, one you can afford 🙂
Spend about 1-2% of your monthly income. If you want to spend more, what else can you give up?
Tip #10 – Learn How To Invest.
When was the last time someone recommended you open an investment account?
Nobody talks about investing. We don’t learn about investing in high school, college, or from our parents.
I’m here to tell you that as a young adult, prioritizing investing is one of the best decisions you will make.
Time goes by fast and you won’t be a young adult forever 🙂
When you’re ready to start investing. Reach out to the professionals. Find a Registered Investment Advisor (RIA) and take it seriously.
Investing saves you money in the long run. It saves you from having to take money out of your pocket and working longer than you have to. You don’t have to retire at 65. You can retire at 50 if you spend your money wisely and start investing ASAP.
Don’t let investing be overwhelming. As I said, reach out to the professionals and take it seriously. Also, get into the habit of meeting with your RIA at least once a year. Treat it like your yearly physical.
Tip #11 – Choose To Invest In Yourself.
It’s important to invest in your personal development.
Always try to be better than who you were the day before. Learn to be disciplined. Commit to a goal and stick to it.
Your goals can be as simple as; tidying your room before you go to bed, exercising 10 minutes a day, or making your bed every morning.
In the processing of investing in yourself, you start to make better decisions. Better decision for yourself and your money.
Overall, investing in yourself is good for your physical and mental health, your career, and your money.
Tip #12 – Understand Your Mortgage.
This is super important even if you don’t have a mortgage.
It’s important to understand your mortgage because, at the end of a 30-year fixed-rate mortgage, you can end up paying the bank double what you borrowed. How does that happen?
If you do have a mortgage, use this Amortization Schedule Calculator to see how much interest you would pay at the end of your mortgage.
Here’s what happens, let’s say you borrow $100,000 to pay for your home. At the end of your 30-year fixed-rate mortgage, your total interest payment will be about $100,000. This means that in total, it will cost you $200,000 to buy a $100,000 home.
Banks make A LOT of money on mortgages.
The great news is, you don’t have to stick to the 30-year payment plan and pay double what you borrowed. Even better, you don’t have to refinance your mortgage.
So what can you do? It’s so simple that I know you will start doing it.
Simply stay a month ahead of your principal payment. The principal is the amount you borrowed and have to pay back no matter what.
What you’re doing is simply staying ahead on your principal payment and saving tens of thousands of dollars on interest.
Read, How To Save Thousands On Your Mortgage Without Refinancing to learn more.
Saving tips for young adults are so important especially when we are talking mortgages.
Tip #13 – Value Second-Hand.
Don’t be afraid to buy used; furniture, clothes, home décor, computers, cell phones, shoes, purses, etc., etc.
I can’t even begin to tell you how much money you will save buying second-hand items.
I understand that buying second-hand might not be your “thing” but don’t completely turn it down without giving it a try.
I am slowly getting into the second-hand market and so far so good. If you’re still thinking second-hand is not for you, then just don’t buy it all. Save 100% of your money and invest it!
Tip #14 – “Live Your Best Life” Trap.
Young adults, especially millennials, hear “Live Your Best Life” all the time.
It always irks me when I hear this. First of all, “Live Your Best Life” is usually associated with things. People will say, yes buy it, “Live your best life”….
Guys, things don’t make us happy.
Next time someone tells you “Live Your Best Life”. Answer with a proud yes. You are living your best life by always investing in yourself and being smart with your money.
Tip #15 – Find A Mentor.
Find a mentor that’s a least a decade older than you. It’s important to have a mentor with a proven track record. Have they reached financial success? Financial success is different for every person so just think to yourself, do I want to be this person in 10 years?
If yes, reach out to them. Ask for help and guidance. Learn from their mistakes and always be willing to learn.
Saving Tips For Young Adults Summary
These 15 saving tips for young adults will save you hundreds of thousands of dollars and get you on the right path to financial success.
You don’t want to get to 40 or 50 years old and think, where did I go wrong? I’m not happy, I don’t have money for retirement, I don’t have the career I want to have.
Here’s a summary of the 15 saving tips for young adults:
- Tip #1 – Learn To Budget
- Tip #2 – Keep Your Debt Low
- Tip #3 – Build An Emergency Fund
- Tip #4 – Learn To Value Experiences Vs Things
- Tip #5 – Understand The Value Of Your Hour
- Tip #6 – Build Good Credit
- Tip #7 – Groceries Are Expensive
- Tip #8 – Learn How To Negotiate
- Tip #10 – Learn How To Invest
- Tip #11 – Choose To Invest In Yourself
- Tip #12 – Understand A Mortgage
- Tip #13 – Value Second-Hand
- Tip #14 – “Live Your Best Life” Trap
- Tip #15 – Find A Mentor
Remember to bookmark, print, or email yourself this post for future reference.