15 Money Saving Tips For Young Adults
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.
1.What’s your monthly income?
2.How much do you spend each month on fixed expenses?
3.How much money could you save each month?
4.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.
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!
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
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