For many millennials, money is tight. In fact, 62% of millennials say they’re living paycheck to paycheck due to mounting bills, skyrocketing credit card debt, looming student loan debt, increasing rental rates – the list goes on. Couple that with the fact that millennials make less money than baby boomers, and the situation begins to look pretty bleak.
The good news is that even for cash-strapped millennials, it is possible to save money. It just requires following the right financial tips. In this post, we will be sharing practical tips on ways millennials can start saving money, whether your goal is to save for retirement, pay off student loans, or save for something else.
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- How To Save: Money Tips For Millennials
- Opt for a Low Interest Credit Card (but pay attention to other fees, too)
- Know Your Credit Scores
- Create an Emergency Fund
- Start Investing
- Track Your Spending
- Take Public Transportation
- Make Your Coffee At Home
- Create a Grocery List Ahead of Time
- Learn How to Cook
- Stay In Instead of Going Out
- Create a Plan to Pay off Debt
How To Save: Money Tips For Millennials
Opt for a Low Interest Credit Card (but pay attention to other fees, too)
Credit cards can be helpful; however, they can also be major sources of debt. While we won’t argue against them, it’s important to make informed decisions when applying for them. When choosing a credit card, go deeper than just comparing interest rates to see which one is lower. What else should you look at? Here are some of the most important items:
- Annual fees
- Perks and rewards
- Cashback programs
- Special deals for transferring balances from other cards
The right credit card will offer flexibility, reliability, low-interest rates, and no annual fees. If there is an annual fee, make sure the benefits far outweigh it. Additionally, if you have bank accounts with a leading bank, that might give you an edge when applying for their credit cards, too.
Know Your Credit Scores
As mentioned in a previous post, your credit score can impact your life in many different ways. Ensure you know your credit score and use that information to inform your purchase decisions. For instance, if you know that your credit score is less than ideal, take time to build it up rather than rushing into a car loan or another situation in which you’ll be paying higher rates based on your credit score.
Also, understand that you do not have a single credit score. Each of the three credit bureaus, TransUnion, Equifax, and Experian, tabulate your score differently. Additionally, some lenders, such as car dealerships, use a different credit score altogether.
Create an Emergency Fund
Nothing puts a crimp in your personal finances quite like an emergency. This could be unexpected repairs to your car, a plumbing issue in your home, or any number of other things. Creating an emergency fund allows you to have some “rainy day” money, so you won’t have to charge your credit card or spend money earmarked for other bills when unexpected expenses arise.
Most people think that investing is only possible for those with deep pockets. Thankfully, that’s no longer the case. Investing has become much more accessible to everyday people through apps like Acorns and Stash and more traditional investment methods like E*TRADE or TD Ameritrade.
Start investing now so that you can take advantage of compound interest. While investing can help you build your nest egg and improve your net worth, it is important to follow some important tips. First, do not invest any money that you cannot afford to lose outright. Also, invest for the long-term, not for tomorrow.
Track Your Spending
It’s impossible to make headway financially if you don’t know where your money is going. Start tracking your spending daily, and then take a deep dive into your expenses every month. This looks a lot like budgeting, but it actually goes into greater depth because it allows you to identify trends and habits, curtail negative spending habits, and make course corrections in real-time.
Take Public Transportation
If possible, utilize whatever public transportation is available to you. Taking the bus or metro will almost always be cheaper than using your own vehicle, especially if you live in a city where you have to pay for parking.
Make Your Coffee At Home
How much do you spend on your morning cup of coffee? Chances are it’s at least $3, more if you like flavors other than black coffee and sugar. Cutting out your daily cup of coffee can save you a lot of money each week, and it costs just pennies per cup to brew your coffee at home.
Create a Grocery List Ahead of Time
One major source of overspending is grocery shopping without a strategy. Simply put, plan your meals for each day of the week, write down whatever ingredients you’ll need, and then stick to your list when shopping. Not a fan of writing lists? Tons of smartphone apps can help, and some even integrate with Alexa and other virtual assistants.
Pro tip – don’t grocery shop while you’re hungry. You could end up splurging on a bunch of items (read: treats) that weren’t on your list. Snack first, then shop. Or better yet, order your groceries online so that you can track how much you’re spending and guarantee you won’t go over your budget.
Learn How to Cook
Another frequent culprit of overspending is fast food. Not only do the costs of dining out add up, but most fast food meals are unhealthy. You can prepare a comparable, healthy meal in your own kitchen for less than you would pay in a restaurant in many cases. Plus, with the wealth of resources available today, learning to cook has never been simpler.
Stay In Instead of Going Out
Going out is so much fun; however, it can also be expensive. Going to the movies can cost $50 per person between the movie ticket, snacks, and soda. If you have a family, one movie could blow your entire grocery budget for the week. On the other hand, we all know how quickly drinks add up when you’re having a great night out with friends.
Instead of going out, opt to stay inside. Movie rentals cost just a few dollars, and there are tons of cheap things you can do for fun, from game nights to bonfires in the backyard. Avoid reckless spending by hosting gatherings at home – your friends will thank you too.
Create a Plan to Pay off Debt
Save money on interest by paying off your debts quickly. It’s important to create a strategy to pay off debt to ensure you’re as efficient as possible. There are two primary methods – the debt snowball and debt avalanche methods. Choose whatever method is most motivating for you and stick with it until you’re debt-free.
It can be a bit disheartening to hear that while more millennials have gone to college than previous generations, we earn less money. This has caused us to delay marriage, starting families, and buying homes, and some millennials opted (or were forced) to move back in with their parents. Above are just a few of the money saving tips millennials can use to achieve their financial goals. Check out 8 Budgeting Tips for Millennials for more.