Saving advice for young adults that we can all learn from!
Here are 10+ small ways to help you save some extra money each month (and none of them involve giving up avocado).
1. Track your spending and create a budget. You don’t have to create a massive spread sheet with 100 categories (unless that’s something you enjoy). Instead, you can use an app, or online software to simplify the process for you.
2. Give your savings account a nickname. This tip has become very popular. Instead of keeping your boring numerical savings account name, consider changing the name to reflect a specific financial goal. You could call it “Europe Trip”, “New Car Fund”, or “Moving Out By 2019”, whatever will motivate you. You will be less likely to take money out when you can see what else it could go towards.
3. Prioritise paying off credit card debt, or just avoid credit cards altogether! Don’t leave debt and late payment fees to multiply in the background. The best way to avoid credit card debt is to put off owning a credit card as long as possible in the first place. Cutting up your credit cards is another way to ensure you don’t spend money on them. If you’ve already accumulated lots of debt, try and save money by consolidating them into a loan to lower your interest rates.
4. Negotiate better contracts on recurring bills. Set aside a day every now and again to look through some of your monthly bills like your phone plan and electricity, and do some research on other options available. When they are due to expire, you can try to negotiate lower costs for renewing or switch to a provider with better value. And while you’re looking at your bills…
5. Automate your bills. When your bills are being taken straight out of your bank account each month, you never have to worry about late fees. It will also teach you to better manage your money. You’ll know you have to have a certain amount in your account at month-end so the bills can be subtracted.
6. Set up a savings account at a different bank. This will reduce temptation to move money across from your savings for impulse purchases, because it will be more difficult and time consuming. Also, looking for another savings account will prompt you to shop around for a better interest rate than what you’re currently getting. We do recommend keeping a small emergency fund at the same bank as your checking account, so it is easily accessible should you need it.
7. Catch up with friends at home. This may be a revolutionary idea for some social groups, but you don’t have to go out just to see each other. Try reducing the amount of money you spend going out to bars and restaurants to see your friends, and invite them around to your place instead. If the thought of cooking dinner for a large group stresses you out, reduce the workload by hosting a potluck. Choose a theme and ask people to bring a dish. (Mexican food is a popular potluck choice, because it’s easy and affordable!).
8. Shop savvy. If you're in the market for a medium-large new purchase, like furniture or a new laptop, don’t just go out and buy the first thing you find. Find something that suits your specific needs and will last you a long time. Research where you can get it for the best price. And if you can afford to wait a couple more months, then hang on until it goes on sale and you can get a good deal. For smaller, everyday purchases, use coupon apps and keep track of store credit expiry dates.
9. Minimise your utility bills. It seems super simple, but it’s the little extra costs that add up over time. Wait until your washers are full before running them. Put on a jacket instead of turning on the heater. Put a time limit on showers. Turn off lights and appliances when they’re not being used. Basically live by the rules your parents would have nagged you about when you lived at home. Living with a roommate can also help you cut down on many of your bills by bringing in extra income to split payments.
10. Cancel unnecessary subscriptions. Speaking of the little things adding up. All those $10-a-month subscriptions end up being quite costly, and you could probably live without most of them. You don’t need Netflix, Stan, Plex AND Foxtel! Weigh up how much value you’re actually getting from these services, and look at cheaper or free alternatives. Also, keep an eye out for those sneaky automatic renewals; make a note of when subscriptions tick over so you’re more aware of them.
11. Live within your means. Social media is creating an exaggerated expectation of the lifestyle you should be living in your 20s. No one should be expecting to you keep up appearances with millionaires. If you have friends that are not supportive of you trying to save money, then they might be another cost to cut out of your life.
But, what's it all for? What would I possible be saving for in my 20s?
How about: a home, your retirement, travelling, investments, paying off education costs, your family, that big medical bill you didn't plan on getting, a new car, or even just the general peace of mind knowing you're financially independent and stable?
It’s never too early to develop smart financial habits. If you save some money now, your older self will thank you!