“It is never too early to encourage long-term savings.” – Ron Lewis
Millennial today need to learn how to dominate finances and get more out of life. 20s call for great fun such as enjoying going to the university or perhaps you have graduated from college and moved on to the next stage of adult life. This is probably the right time to start saving and investing if you haven’t started already.
At this point, it is quite likely that you are employed or have just entered the money-making world. You are yet to bring upon yourself the burden of mortgage to cover, a spouse to please, or children to care for. Meaning you are only looking out for yourself and the list of personal expenses are minimum, which makes it the perfect time for you to start saving up. Do not think of 20s as only a time period to explore because starting young is the best way to get ahead.
Create A Separate Account
Keep savings account separate from the personal account that is used on a daily basis. Now this does not mean you make use of both the accounts to pay the bills. Here we are implying the old ‘out of sight out of mind’ trick which works well considering the fact that it is supposed to be left untouched. The idea of having more than one account is to settle the temptation of using the money in account.
When setting up a savings account remember that you are intentionally separating some chunk of money to a safety deposit in pursuit of valuable goal. Address the account as the source where you deposit money every month and let it rest. This technique will immediately reduce your temptation of pulling money from that particular savings account. We encourage you to assume that you are contributing to this account regularly and accumulating a good sum to fall back on in the future.
Honour Your Savings Accounts
Do not shy away from making use of quirky tools when it comes to saving money. Attach an honour to your savings account. Wondering how you can achieve this? You might find some humour in the answer, but what matters is to make profit in the end.
Give your account an identity that is different from what reads as Savings Account #486705. Yes, give your savings account a nickname! Be more precise when you give a nickname because that will prove to be more effective. Name it after something you wish to save for in particular such as “Apartment Savings”, “Quit My Job” or “Europe Road Trip”. This method is effective because the more specific you get, the less likely you are to keep skimming a little off the top. When naming a certain something, you attach an honour to it that cannot be disgraced.
Ketogenic diet, low carb diet, fruit based diet we’ve all heard of these at some or the other point of our lives. It has always been difficult to go on diets, but once you learn the secret to master it, then you might be able to accomplish this task.
Ever heard of a cash diet? If this concept has never graced your ears, then to explain in simple words, a cash diet is like cleansing juice for your financial world.
Cash diet is similar to ketogenic diet in terms of the time frame as it cannot be adapted as a long-term solution. So wondering how it tends to be a solution to save money? Well, though being a short term solution in nature, a cash diet assists to help curb cravings (read, keep your spendthrift self in check) and get your finances back on track.
This diet is highly recommended for people who tend to spend a lot when they possess enough cash. So it is likely that you notice the flow of how easily and quickly the money is disappearing from your wallet.
Follow these guidelines to get into cash diet:
Pick a month and spend cash only for your day-to-day expenses. The most adapted method when following a cash diet is by running the cash flow on the basis of a simple theory i.e. how much is the earning minus how much is being spent. (Income) – (Bills, debts, savings) = remaining cash to spend.
The remaining cash is what you will allot for spending on everything else like food, entertainment or transportation. For instance, let us consider the remaining amount is 800$ and divide the amount by four, which allows you to use $200 for food, entertainment or transportation expenses.
In case you charge the expense on your card because you bought some clothes or any other item online then ensure that the next week you minus that amount from the $200 which is entitled for the weekly expense. Say you bought a t-shirt for $25 dollar in the first week, and then you roll $25 over to the second week and only take out $175 when you go to the ATM.
Now that you are taking the corresponding money out of your wallet and rolling it over to use in the next week it will help you understand how fast you’re spending and push you to think twice about your purchases. An excellent way to save money is by eating in; try to avoid eating at restaurants and cafes entirely. In fact, there is a famous blog revolving around the very idea. The blog is run by Cathy Erway, who saved $7,000 over the course of two years. She was left amazed and ended up writing her chronicled journey on the hit blog, “Not Eating Out in New York”.
“Oh! Its Friday night let us visit the new restaurant or go bar hopping”. The following statement is a red signal when you are on money saving mission. This does not necessarily mean that you avoid it all together and bail out on your friends every weekend and end up sulking on the couch. Here is what you do – go enjoy with your friends once in a month and in turn explore more ideas of entertaining yourself and your friends at home.
Enjoy a backyard barbecue session on the summer nights and slumber dinner parties during fall. It is relatively cheap to cook and serve at home; try doing this monthly or even on a weekly basis with your friends for great fun without spending too much at the bar or a fancy pizza place. Why not even try to make your very own pizza! Cooking and spending time indoor is way more relaxing considering the amount of time in your hand without having to deal with a huge check at the end of the night.
Shop From Sale
By all means, feel free to shop from sales. Buying from sales is like solving two problems at once! Firstly when you buy from sales, you are buying things at a much cheaper price while meeting your requirements and secondly, you are guilt-free of spending too much.
Fall is a great time to invest in almost everything right from furniture and electronics to clothing because the prices are marked down during this time. One must definitely shop from sales especially when furnishing a new home or refilling office supplies. Since your product list will be long, better add them to your cart when on sale. Make it a habit to check the clearance racks every time you shop.
Ignore all the Joneses
Lastly, we understand that the millennial generation is constantly racing to compete for almost anything and everything. Being super active on social media does push you to try and keep up with the fancy lifestyle, and of course it gets to you at some point and you will find yourself caught in such joneses in your life.
The picture perfect lifestyle of your friends on social media develops a fear of missing out on your own life. Millennial today are used to showing off the good parts of their lives on social platforms. For instance, they are used to capturing anything they deem fancy and post pictures on their social accounts. This is a major reason driving young people to try to keep up with such joneses, which ends up being disastrous. This leads to spending money exuberantly and adding to your debt, which leads to ignoring responsibilities like saving or investing for the future.
Financial advisors suggest that you tune out from such distractions and tune into solid advices which will drive you to start investing for future security. Investing early on is a standard role that one must adapt to so as to secure their future.
Early 20s is the best time to recognise that money is a tool to set the tone of the life you wish to lead. This is the time when you learn to make smart choices regarding spending, savings and investing, and hopefully the following tips will help you accomplish the life you desire.
Author Bio: Anna Barton is often called as “A Finance Whizz” by her colleagues and friends because of her awe-inspiring financial advice. She works as a finance specialist at Northants Accounting. She is also a passionate creator, who has an expertise in the finance niche.