Millennials and Money Series: Millennials Savings and Money Habits to Start Today
Millennials are a unique generation to have grown up with technology nearly every step of the way. Not only that, Millennials were conditioned to go to college and get a degree. Times have changed and educated Millennials are struggling to find high enough wages to help pay for the high cost of education.
That being said, having grown up with technology it has allowed for many ways to save money and generate extra revenue. This article I will go into detail several ways Millennials can save money and squeeze every dollar out of their budget.
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5 Simple Money Saving Advice for Millennials
1 – Eliminate Debt
The number one factor that will slow your ability to save is debt. If you are looking to get serious about saving then plan on eliminating your debt first, that way nothing stands in the middle of you and your most important wealth building tool, time. There are several ways to eliminate debt and a good place to start is by researching.
You can also grab the Debt Free Planning Workbook here to help you get out of debt quickly.
Dave Ramsey is a popular name in the personal finance space and it is a great place to start. From here, you can see the plan he’s proposed for his audience and tweak it to fit your needs.
Everyone’s different but eliminating debt is a must if you want to become serious about saving.
2 – Create a Budget
An effective way to save money is directing where your income goes in the form of a budget. This is typically done each paycheck or at least once a month, planning where you can spend your money and when to save you money.
Not only does budgeting lay out your plans for the month, you can also see the places you can curb spending such as eating out or entertainment.
There are several apps and websites on the market to help you start a budget. For many, simply opening an excel file and creating a custom template is the best way to go. Also, printing out a sheet and hand writing a budget is also an effective way to budget.
You can also grab the Savings Goal Workbook here to help you get started saving quickly and easily.
Whatever works best for you, find it and utilize it going forward.
3 – Side Hustle
Growing in popularity is the side hustle, which is when you utilize your free time to generate more income. For example, you may work a 9 to 5 office job, but when you get home you sell homemade blankets on Etsy, work on starting your blog, or grow your affiliate marketing income. Having a side hustle is an effective way to generate income and help boost your savings potential.
Just mentioned was Etsy, which is a site you can find a variety of homemade crafts or unique items. Other places to really begin a side hustle include Fiverr.com, Upwork.com, or create your own website and begin your business that way.
While implementing a budget and increasing your income, you can truly boost your savings potential.
4 – Retirement Accounts
If you’ve already saved up some money but are now looking to save for retirement, it is important to understand the various retirement vehicles out there. For this, we’ll go over two of the most popular and widely used, and those are a 401k and a traditional IRA.
Traditional IRA vs. 401K Plan
Both are similar in nature but have a few differences. Let’s take a closer look.
What is the 401K Plan and how does it work?
First off, a 401k is offered through your employer and utilizes pre-tax dollar to fund the account. Within the 401k, there are funds you can invest your money into that are pre-determined by the plan sponsor. Once the funds are deposited into the account, they sit there until you retire.
You are able to withdraw funds early but you will incur a 10% penalty for early withdraw, along with having to pay taxes on the money.
What is a Traditional IRA and how does it work?
An IRA is similar in that it uses pre-tax dollars, but the main difference is that an IRA is not offered through an employer and anyone can open it. Also, within an IRA you have the ability to select from a wider range of equities or mutual funds, giving you more flexibility in how your money grows.
Keep in mind the annual contribution limits and should you want to invest more, you will likely have to open a traditional brokerage account.
5 – Automation
Lastly, a way to help you save is to automate the process as much as possible. With the growth of financial technology, we can nearly automate anything we choose. That being said, automating deposits into a retirement account or automatic bill pay will allow you to say on top of the game.
This creates a habit of saving, but also doesn’t give you a chance to spend the money. Similar to the old phrase out of sight out of mind, if you never see your money then you have a tendency to feel less pain.
Millennials have many advantages within reach to help grow and put in place the proper habits to save efficiently. Saving is necessary but understanding how to save is important as well.
If you are saving for an emergency that’s one thing, but saving for retirement is completely different. Regardless, begin saving and I’m sure you’ll begin seeing a noticeable change in your financial health.
I hope this breakdown of the five easy money-saving tips help you discover some additional ways to grow your finances this year. Let me know what’s your favorite money-saving tip in the comment section below. If you want more handy money and tax tips, then feel free to check out my latest articles here.
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Until the next money adventure, take care!
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