A 2016 survey of 7,000 Americans found that 34 percent have nothing saved. When it comes to money and millennials in particular, though, things get a little confusing. While one study found a small percentage of millennials have already stashed away $100,000, another found 46 percent of young millennials have nothing saved. If youâ€™re in the â€œno savingsâ€ camp, how do you get started when it feels like you donâ€™t have a penny to spare?
Set a Small Goal
First things first. All savers have to start somewhere and sometime. It is all too easy to quit before you even start. If you are asking yourself how to start saving, congratulate yourself for taking the first step. Then create a small goal that will set you up for early success. If you saved no money last week, set a goal to put aside $5 or $10 this week. Set up an automatic transfer each week. By the end of the month, take note of how much you have saved and keep going.
Keep Yourself Honest
Now that you have the savings ball rolling, there are several things you should do to keep yourself honest. Consider setting up a budget and tracking your spending. These two tools will give you a clearer picture of how you want to spend your money and how you actually spend your money. Check out some of the best mobile budget app options to keep track of how money is coming into and out of your accounts each month.
For some people, a separate savings account works. Others prefer savings apps such as Tip Yourself or Digit. Or maybe you will want to set up an account with a separate bank that offers a high-interest online savings account. That way, there is little temptation to pillage your progress, and you can let your savings continue to grow.
Earn More or Spend Less?
This is a trick question. The answer that will yield the best results is actually both. Depending on your employment status, however, one may be easier than the other. For instance, if you work in a field where you are able to negotiate a salary or you are eligible for annual reviews, raises and bonuses, it makes sense to develop a plan that will allow you to increase your main source of income.
Additionally, millennials are making their mark on the workforce in several ways. Not only is the millennial generation more likely than any other generation that came before to strategically job hop in order to increase income or to attain more benefits, millennials are also known for adding to their monthly income with side hustles. Starting a side hustle could be anything from babysitting and dog walking in the evenings to participating in the sharing economy by offering rides or running errands for others on the weekend.
However, if you do not see income growth as an immediate opportunity or simply do not have time to side hustle, then it may make more sense to put effort into decreasing your spending by adopting a more frugal lifestyle. Bringing lunch from home, avoiding impulse shopping, taking advantage of your local library, purchasing items from thrift stores, or using FreeCycle and other groups to stop spending all together are all ways to cut back on monthly expenses. An added bonus of frugal living is that it often encourages people to make more eco-friendly choices while allowing them to stockpile some savings.
Save the Gap
A little math is the secret to significant savings magic. Calculate how much you earn each month and then subtract the amount of money that you need to live. Factor in things such as housing, transportation, food and entertainment. The difference between those two amounts is how to make big-time savings happen. Most people look at any extra money as an opportunity to spend more. Instead, itâ€™s an opportunity to save more. Set some aside for an emergency fund. Then look at other savings options such as retirement accounts, housing down payments or even a travel fund.
All savings accounts start at zero but it doesnâ€™t have to stay that way for long. Keep track of your income and expenses, look for ways to increase your income, seek opportunities to slash expenses and consistently commit to saving the gap each month. Keep at it and you will be surprised at how you transition from the group of millennials with no savings to the headline-making crowd with six-figure savings accounts.
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