Savings Tips For Millennials

posted in: Money Blog

A lot is written about financial strategies for millennials, and with good reason. Despite the much-publicized entrepreneurial spirit of the current generation of young professionals, there are some very serious economic disadvantages that have fallen on the shoulders of the same group. Massive student debt, lack of access to retirements funds, falling wages, and scant job opportunities with concrete career paths are crippling millennials these days, no matter how much initiative they show to start their own businesses.

Savings Tips For MillennialsA lot of this can be chalked up to an inherent disadvantage. Every generation meets its own set of possibilities and misfortunes, and for millennials that is a particularly curious blend. They have more opportunity than any other modern generation to innovate and create their own jobs, but they also tend to start their professional lives already in the red. In many cases, that’s just how it is. But it’s important for millennials to remember that at least some of their disadvantages can be offset by something as simple as strategic financial planning and savings efforts.

That’s not to say sitting down and mapping out a budget on Excel can eliminate college debt or establish a savings fund. But by taking advantage of some of the following saving strategies, young professionals can find ways to improve their financial situations.

Save While You Pay Off Debts

I know, this is easier said than done. But it’s still an important piece of advice, even if just to alter one’s mindset slightly. Too often the issues of paying down student debt and saving long-term are posed as either-or, mutually exclusive options. That’s simply not the case. While it’s important to pay what you’re absolutely obligated to pay regarding existing debts, there’s an argument to be made for then prioritizing savings over additional debt payments. Particularly if “saving” means setting up a retirement fund, the value of compounding interest is simply too great to pass up. So even if we’re talking about tiny amounts of leftover income once debt obligations are fulfilled, that money would often best be used in a savings account, rather than as a means of eliminating more debt than necessary. This depends to a great extent on one’s specific financial situation, but again it’s worth considering that paying debts and saving don’t necessarily have to be mutually exclusive.

Take Advantage Of Technology

One analysis of how millennials might approach market investments (and specifically the forex trade) made an interesting point that young professionals can use their high affinity for technology to take advantage of a growing number of applications and websites that offer quick trading and real-time savings options that simply haven’t been available to past generations. A moment’s research can turn up apps for saving money, automatically generating a budget, investing leftover change, or even setting up a stock portfolio. There’s naturally a varying degree of effort and expertise required by such programs, but overall millennials are almost certain to be able to find at least an app or two that can help with a savings effort.

Save Where You Can’t See

One of the simplest tips offered when reviewing savings strategies is saving money by keeping it in an inaccessible account, or at least one that can’t be tapped into with a debit card. Some young people have the tendency to simply grow their checking accounts or keep side savings accounts attached. These options are fine for those who happen to be particularly disciplined, but it’s simply a more effective long-term strategy to allocate savings elsewhere, either in a different account entirely or in some sort of investment where the funds can’t easily be accessed on a whim.

Focus On The Little Things

To say “focus on the little things” may sound like a cliché, but it’s common advice for a reason: it works! Furthermore, it applies to savings initiatives in a very specific way. One look at potential savings strategies for millennials did a nice job of explaining why by simply outlining some of the little things, such as rent costs, daily Starbucks trips, transportation, etc., all of which can quickly become subtle but significant drains on finances. This isn’t to suggest that millennials should flat-out rough it when they’re making money. However, many might be shocked to find how much money a few simple lifestyle changes can save. That might mean biking to save on gas money, brewing coffee at home instead of buying it on the way to work, “brown-bagging” a lunch, etc. The good thing about this tip is it can be tailored to each individual’s life and habits.

It takes more than a few general savings tips to put together a comprehensive savings strategy. But considering some of the disadvantages millennials are facing, these ideas can at least provide a good starting point. And the key, above all else, is to start thinking about it now. The sooner one decides to focus on saving, the more good it will do in the long run!

2 Responses

  1. Laurie
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    I do agree you should save while paying off debt. A lot of people say that you should pay off debt first. However, you really need to start thinking about retirement early and should at least have a little emergency fund just in case – or you will be in more debt. Great tips, thanks for sharing!

    • Judy Lawrence
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      Well said Laurie. Deciding between debt and savings is an ongoing question, but not an either or answer as you clearly pointed out.