If you are in your twenties, then you know that getting into the real world can be challenging. Many of us are still struggling to get out of college debt and take on our first jobs. It seems like everyday life keeps getting more expensive, but it doesn't have to! When you're looking for ways to save money, it's easy to think that the only solution is to cut back on your expenses. But sometimes, looking closely at how you make your money can be just as effective - if not more so - than chipping away at the things you spend it on. And when you are single in your 20's, you have more wiggle room when it comes to making decisions about how you make your money. Here are some tips on ways to do just that.
ESTABLISH LIFELONG FINANCIAL HABITS NOW
One of the most important things you can do to ensure that your money is working for you, regardless of your age, is to establish good financial habits. At this point, some of these habits might be second nature to you. Like you are automatically depositing a certain amount into savings every month. But some might not be as familiar yet, like cutting back on unnecessary purchases. However, these good habits will become a part of who you are and how you make your money with time. So it's a good idea to ease yourself into them now while you have more freedom over your decisions about where to put your dollars.
BUDGETING IS KEY
Like most young adults, you might not be good at creating budgets. This can hinder how much money you end up with when you get your paycheck, and it feels like all the money's gone before you even start to spend it. To build any financial stability, though, budgeting has to be a priority. That means taking an outside look at your spending and income and making sure they're in sync. When you're building this budget, be honest with yourself - it's not about depriving yourself of fun stuff. It's about making sure that all your expenses are necessary and there is money to put into savings at the end of the month so you don't get stuck in a debt trap later on.
USE A CASH SYSTEM
Using cash for most of your purchases is one of the best ways to keep yourself from overspending. It's easy to think that you have a certain amount in hand and then spend it all without realizing that those little trips add up and leave you with nothing for something essential later on. So start using cash, and split your paycheck up into envelopes for food, bills, entertainment, and spending money. That way you can see what's going out and how much you have to spend on everything else. And if there isn't enough leftover by the end of the month, all that's necessary is a little less eating out or a little more saving.
LIVE AT HOME
If you can, try not to move out on your own too early. This is especially true if you're single and looking to get serious about saving money. When you live at home, there will be no rent or mortgage, no utilities to pay, and probably no car payment (depending on where you live). That might not seem like a huge benefit, but it will add up to much more if you can wait until you have all these expenses before moving out. And in the meantime, feel free to enjoy your parents' food!
CUT DOWN ON TAKE-OUT AND RESTAURANT FOOD
When we think about saving money, we often think about cutting back on our entertainment and eating out. While you should definitely keep this in mind and cut down where you can, it's also good to remind yourself that it's not just these expenses that will eat up your savings – it's the little extras too. For example, small stops at the coffee shop might not seem like much, but they're quite a bit when you add them up every day. Cutting some of these out or re-thinking them can make a world of difference in your savings.
MAKE EXTRA MONEY ON THE SIDE
There are many ways to make extra income - including selling old things, babysitting, doing odd jobs for your neighbours, and so on. Even something as simple as walking dogs can net you a little extra money! Take advantage of all the opportunities available to you right now and put this money away. It might seem like just a few bucks here and there, but it will add up over time. Together, they might even be enough to cover the cost of another trip home.
ALLOCATE YOUR INCOME APPROPRIATELY
When you're getting a paycheck, it's easy to think of all the different things you'll need to spend your money on and then divvy up your income accordingly. But there are a few other things to consider – like putting some away for emergency spending and going out, as well as saving up for shopping trips with friends or a new outfit for a special occasion. When you have a plan in place, it's much easier to stay on track and not get caught up in impulsive spending or forgetting about something important. Like your rent payment!
AVOID GOING INTO DEBT
If you are in any debt, it's time to take a look at your situation. Start by making a list of all outstanding loans and accompanying interest rates. Once you know just how much money you're really shelling out every month, figure out what steps you can take to change this in the near future. Perhaps paying off one smaller loan will be enough to convince the lender of your dedication, and they'll agree to reduce or remove the interest rate on another. You could also save up for something big, like a car or vacation, to pay it off all at once. Whatever you do - don't just ignore your debt!
INVEST YOUR MONEY WISELY
Don't look at your 20's as the time to make all your money mistakes. Setting yourself up for financial success now will mean you have more options later on, so be smart about how you invest. Putting your money in a savings account might seem safe, but it could definitely be doing better things for you elsewhere.
PRIORITIZE SETTING UP AN EMERGENCY FUND
This should definitely be your priority, no matter what. Even if you don't think you need to worry about it yet, it's never too early to set up an emergency fund. Without one, any unexpected expenses could very well throw you right back into debt or even worse. So this should be the first place you put any extra money after paying your monthly expenses!
START SAVING FOR RETIREMENT NOW
If this sounds like a weird suggestion, think about it this way: if you wait until you're 30 to start saving for retirement, you'll need to save double the amount you would have needed if you'd started at 20. The money you save in your 20's is going to skyrocket over time, and by the time you hit your 50's or 60's, it will be massive! Of course, don't neglect to save for retirement before this either – even with just a little bit now, you'll be in pretty good shape later.
AVAIL OF INSURANCE COVERAGE
You've worked hard for everything you have, and you don't want to lose this stuff in the blink of an eye. Life insurance is never a waste of money - no matter your age or stage in life! Whether it's health insurance or something else entirely, be sure to protect yourself and your family from the unexpected with good coverage.
It's easy to go overboard in your 20's. Keep in mind that when you're just starting out, it might take a while for you to find your feet and feel like you can finally relax and enjoy life a little bit more. During this time, don't stress yourself out to the point of not even knowing how to have a good time – do your best, and have some fun! You can save up all the money you want for that dream vacation or house someday, but if you're miserable now, what's the point? Treat yourself every once in a while – it will be here before you know it. It's important to find a balance to soak up the present while also financially securing your future.
