When it comes to finances, many of us can feel uninformed and overwhelmed about what exactly to do with our money. You have bills, living expenses, groceries, gas, taxes, debt payments, and on top of that, you’re told that you need to save money. Saving may seem like an impossible task when it feels like you’re living paycheck to paycheck, but there are ways you can more effectively manage your income.
You don’t need a knowledge of economics to be financially savvy. Below are seven tips for Millennials on how to save money.
I know it’s tedious, but mister budget is your friend. Knowing how much you make and how much you spend per month is crucial to maintaining financial stability and knowing how much you can reasonably save with each paycheck. One old but gold method is the 50/30/20 budget. In short, once you calculate your after-tax income, 50% goes to necessities, 30% goes to wants, and 20% goes to savings/debt payments. So, let’s say you make 3k per month, $1,500 is allocated to your necessities, $900 is allocated to your wants, and $600 is allocated into savings or debt payment.
Now all that seems very simple until you’re trying to decide between a need and a want. To safeguard yourself from uncertain events, you must plan a budget for buying house insurance or comprehensive car insurance for that matter. It is same as keeping emergency funds.
If it’s something you genuinely can’t live without, shelter, food, water, medicine, then it’s a need. If it’s something that would only be an inconvenience if you didn’t have, then it’s a want. It’s up to you to decide what goes into your budget.
Setting and sticking to your savings goals will help you become a better lifelong saver. Don’t treat your money goals like New Year’s resolutions where you plan to just “save more” and leave it at that. Make your goals concrete and attainable, whether is a dream house or a college fund for your kids, know what you want to achieve, and write it down.
Once you’ve established your goals, you need to come up with an action plan and timeline for attaining your goal (this is where your budget will come in handy). As with every goal, be consistent and keep the reward in mind.
Learn to Say No/Cut the Cord
This one might sting a little. When you commit to saving, you’re going to have to sacrifice some luxuries. Depending on life circumstances, this is going to look different for everyone. For you, it may mean cancelling a streaming service (or several). You may have to say farewell to your favourite coffee bar or through your TBR by borrowing from your local library instead of your local bookstore.
Instead of taking out a loan to pay for a new car, add it to your goal list to save yourself from going into debt. While painful, saying no to yourself in the present means you’ll be able to say yes more in the future.
Make Meals at Home
Everyone loves a good night out at a nice restaurant but when the national average is $3,000 per year per individual for eating out, its time to cut back. Yes, you can still celebrate birthdays, life milestones, or other big accomplishments, just think – that’s $3,000 you could be putting into savings instead of spending on your weekly Big Mac.
When you cook your meals at home, not only are you learning and practising a valuable life skill, but you will generally be eating healthier at home than you would at a restaurant.
Purchase Generic Products
Instead of purchasing brand name products, opt for the off-brand or store-brand products instead for a lesser price. A cheap product doesn’t always mean cheap quality.
Save Loose Change
You know those old rusty metal tins your grandmother had that were almost spilling over with quarters and dimes and nickels and pennies? There was a reason for that, it’s because they add up. Saving your spare change makes a huge difference in your financial health. You don’t have to have an old rusty metal tin lying around, but it won’t hurt at all to keep a jar to collect all your change.
Now, you won’t have thousands of dollars within a month or two, but you’ll definitely be surprised by how much money is produced by penny-pinching.
Little Things That Make a Difference
Lastly, making small changes to your everyday life that seem insignificant can make the difference between financial failure and financial success. Instead of driving to work every day, carpool or take the bus. Instead of buying paper towels, use old rags or washcloths to wipe up spills. Don’t buy caskets of bottled water, use a water filter to fill up a large water bottle to drink from. Use coupons.
No really, use coupons. The idea of saving money can be intimidating, but with planning, grit, and savviness, you’ll be well on your way to achieving your goals and attaining financial peace.