10 Ways Millennials Are Able to Save Money

Financial Capital Group

As a ‘millennial,’ I constantly find myself on the receiving end of financial advice that’s either way over my head (tax-loss harvesting?) or seemingly impossible (how can I save half of my income when half my income is rent?). Many personal finance articles don’t exactly take into account the unique position my generation is currently in. Allow me to paint a picture for you:

• More millennials have gone to college than prior generations: Almost a quarter of 18- to 34-year-olds hold a bachelor’s degree or higher — but this education has come at a price. A whopping 71% of bachelor’s degree recipients took out student loans, the median debt hovering near $27,000.
• And we’re feeling the burn of those loans, too: A recent survey by MyBankTracker found that 30% of recent graduates would consider selling a body part if it meant getting rid of their student debt.
• We’re living in cities: Millennials currently reside in urban areas at a rate higher than any other generation. With this shift comes a higher cost of living and, as a result, less disposable income.
• We’re making less money than in previous decades. Despite high education levels, 18- to 34-year-olds are making approximately $4,000 less annually than the same age group did in 2000. Combine that with debt and a high cost of living and you’ll find that the average millennial has a net worth of negative $3,472.
• We’re delaying home and car ownership, as well as marriage and childbirth. According to a study by Goldman Sachs, 60% of 18- to 35-year-olds are renting, and 26% are still living with their parents due to rising housing costs. More young people are postponing marriage and kids, too, often because they want to dig out of debt or live on their own first.

Given these factors, it’s no surprise millennials are having a hard time following traditional financial advice. After paying for rent, utilities, transportation, food, and the occasional night out, many aren’t left with much breathing room in their bank accounts to put money aside for retirement or to build up an emergency fund.

But what exactly can 20-somethings do to start saving more — or at all? I spoke with several 18- to 26-year-olds living in different cities across the country for tips on how they manage to make it work.

1. Get a roommate or move back home

Splitting rent and utilities is one of the biggest ways to save as a young person living in a city. A study by SmartAsset found that in high-rent cities like San Francisco, New York, and Boston, having a roommate saves you $700 or more every month.

Of course, living with roommates is a personal decision that may or may not be right for you for a variety of reasons. But at the end of the day, the financial benefit is undeniable.

Another avenue to consider in the first few years of working and saving is to move back home. Sure, it’s not the most glamorous option and isn’t available to everyone, but living with Mom and Dad temporarily can help ease the adjustment of making it on your own.

If you live with your folks, consider paying something in rent or a portion of the utilities, or decide on a number with your parents and put that amount into a savings account every month. Not only will this help you get used to putting rent money aside consistently, but you’ll pile up some savings to help jumpstart your eventual move away from home.

2. Opt for a low-interest credit card

When used correctly, credit cards are valuable tools that can help you build credit and practice useful money management skills. Many rewards credit cards offer perks like points redeemable for travel or cash back, but making these cards work for you takes diligence and planning (not to mention, many of the better cards come with an annual fee).

For your first credit card, consider opting for “something that’s not going to rack up lots of interest,” says Sean (25, Seattle). “The perks aren’t worth it if you’re only using your credit card in case of emergencies.”

Find a low-interest credit card to meet your financial needs — look for factors like a 0% APR period, no annual fee, and free credit score services.

Already carrying a high balance on an existing credit card? Look into a balance transfer card that can help you start saving on the credit card debt you already have, and use the 0% APR introductory period to make faster progress on a debt repayment plan.

Don’t forget, simply calling your credit card company and asking for a rate reduction can lower your interest rate. It’s worth a shot: The worst-case scenario is that they say no, and the best-case scenario can save you a lot in interest charges over time.

3. Skip the Starbucks

I get it, there’s just something about that white and green Starbucks cup… and that something is just an excellent marketing team. In truth, spending $4 or $5 a day on a latte is running you upwards of two grand a year.

Instead, “Invest in a decent coffee pot and make your own coffee at home,” says Colby (24, Austin). “Don’t waste your money on overpriced things you can make yourself.”

If cutting out money-draining habits is too hard, start out small and opt for a cheaper option. For example, ordering an iced Americano and adding milk is half the price of an iced latte, and tastes nearly identical. That’s a saving of $1,000 a year without making any big sacrifices!

4. Let the little things add up

It might not always feel like you’re making leaps of progress financially, but remember that consistency is key. Small savings every day grow over time, and even more so if you’re putting the money you save in a high-yield savings account and letting the interest compound on itself.

You don’t have to drastically change your life: Listen to your dad and put on a sweater in the winter time instead of turning on your heat and racking up bigger energy bills, opt for generic brands whenever available (it really is the same thing), and don’t fear leftovers.

I repeat: You don’t have to drastically change your life; just skip the guac’ and keep at it.

5. Automate!

If you’re not creating breathing room in your budget on your own, try taking the 21st-century route and find an app that can do it for you.

6. Take public transportation

While taking an Uber around is certainly a more attractive option than the city bus, ask yourself if paying the premium for convenience is really worth it. Deborah (24, New York) says that as far as savings are concerned, “taking the subway is huge — at some point I was taking cabs everywhere and it was the biggest drain on my bank account.”

Sure, your commute may be longer (or shorter, depending on traffic), but if you can wake up earlier, you can save an average of $1,000 a month or more in a big city like New York or San Francisco simply by opting for public transit. Moreover, you can reap the added benefit of not having to search and pay for parking, spend money on gas, or risk getting a ticket.

Better yet, if you live in a relatively flat city, consider investing in a bicycle. You can usually find a reliable commuter bike on Craigslist or a solid new one at Wal-Mart or Target for under $200 — and it will pay for itself after a couple months of car-free living.

7. Brownbag Your Lunches

A Bloomberg study found that for the first time ever, young people are spending more on dining out than on groceries. Not only is eating away from home considered a social event, but time and convenience play a key role as well.

So what can young people strapped for time do to save money on food?

Make it special. Rather than spending money out every day on a meal you can probably make yourself, designate a treat-yo’self day so you don’t burn out.

Instead of five days of $10 lunches (that, let’s face it, are getting old), take yourself out on Friday for $15 or $20 — you still save $30 for the week and enjoy your restaurant experience far more than if it was habitual.

Make the most out of it. When you do decide to eat out, make sure you’re getting the most for your dollar.

Skip getting drinks and stick to water. If you’re still a student (or still have your student ID), check for places that give student discounts on your meal. Check sites like Groupon and LivingSocial for dining deals in your area.

If you can’t give up going out cold-turkey, take small steps to be smarter about what you spend when you do.

8. Live life for yourself, not for your Instragram

The heavy use of social media among young people makes it nearly impossible to avoid comparing yourself to others in your social sphere (or A-list celebrities and models for that matter). But Facebook profiles and Instragram accounts are curated to highlight the glamorous, and studies show that dwelling on friends’ vacation photos and check-ins makes us feel worse.

Weighing your self-worth against others based on the limited information you have access to can be enough to send you on a destructive thought pattern — ‘How can this person afford to take a trip to Thailand? Am I not living my life to fullest? I should quit my job and travel, and figure out money when I get there.’

Instead of modeling your goals after someone else, decide what it is that you want, and set reasonable expectations for how to meet those goals.

If you’re looking to travel, for example, take time out, create a budget, plan a trip within your limits, and start saving for it. It might not happen this month, or this year, but creating and meeting goals will make you feel much better than staring at your phone and resenting others.

9. Know what you owe and budget for it

Creating an extreme bare-bones budget could mean going from 0 to 100… and burning out before you make any real progress. Instead, start out by being mindful of your spending habits and debts.

To create a basic budget, write down all your recurring monthly expenses along with all your projected expenses. For example, I create my grocery budget by figuring out how much I spent last month and seeing if I can reduce it by $10 or so dollars. Consistently doing so trims the excess fat off my spending and gradually gets me saving more — without having to go cold turkey and cutting out the things I enjoy.

10. Get a side gig

Trying to live a life and save money on an entry-level salary is no easy task. If you can’t find breathing room in your budget, consider taking on a side job. You can find a seasonal part-time job for the holidays to offset what you spend on presents.

Source: thesimpledollar

Financial Capital Group, LLC is a lender that provides home and commercial finance solutions for business, professionals, individuals and families since 1999. Our love and care for others is directed as much within our walls as it is outside of them. Our desire is to work together to meet the needs of our customers.

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