Millennials are often stereotyped for spending $14 on avocado toast or taking daily espresso trips to Starbucks. But it’s possible to continue these millennial spending habits as long as the importance of saving money is applied elsewhere. We’ll look at the best way to save money as a millennial without completely eliminating the things we enjoy.
Why Do We Save Money?
Nearly 78 percent of US workers live paycheck to paycheck. That means that if a medical emergency happens or your car breaks down, it can put us into financial stress. Having an emergency savings account to handle these unexpected events is why financial planning services and other experts stress the importance of saving money. Most people know why do we save money and how much to save in the first place, but few will take steps to make it happen. Spending patterns will identify opportunities to save money on food, bills, and other expenditures.
Millennial Spending Habits
To determine the best way to save money and how much to save, our spending habits will provide a good snapshot. Take a look at several months of credit card and bank statements to find how much you’re spending on dining out, shopping, subscription services, and other categories. You might be surprised by what you learn about your spending habits.
How Spending Affects Our Ability to Save
Simply put, we can’t save money if we’re spending most of it. Financial planning services recommend reviewing your spending habits to find areas you can save money by creating a budget and developing realistic savings goals.
An effective budget will be based on your existing spending habits. However, there is some give and take involved. A budget won’t work if it comes at the cost of you feeling constrained by it.
For example, if you absolutely must enjoy a daily Starbucks drink, consider alternative ways to save money on food. Starbucks sells its ground coffee at the grocery store for much less, and you could still get your coffee fix. Or you can cut down on eating out for lunch and bring your meals to work instead.
The idea means to cut down on spending in areas that it makes sense so that overall, you are spending less. This idea will enable you to have money to save.
Best Way to Save Money
Building a foundation based on good money decisions will benefit you in the long run. Use some of these tips below to save more money, stop living paycheck to paycheck, start thinking how to save money every month and even reach financial independence.
- Start a savings goal of 5 percent of your after-tax income then increase it by another percent each year
- Pay down your credit cards, starting with the ones with the highest interest
- Open a Roth IRA and invest money every year
- Use public transportation instead of driving or move closer to work
- Give yourself an “allowance” for eating out, entertainment, etc. Once that money runs out, you can’t spend any more until your next allowance
- Cancel subscriptions or services that you don’t use like the gym, streaming services, etc.
- Keep your car longer and buy a used car if you need a one
- Automate your savings
Saving Money on Low Income
Just because you don’t make a lot of money doesn’t mean that you can’t save money too. If you have a plan on saving money on low income, it takes more planning and the understanding that it’s going to happen little by little.
Being burdened by debt makes it difficult to save money. It is good if you have a plan on how to save money every month. So to start saving more, you need to work on eliminating your debt. Pay off the high-interest loans and credit cards first since they cost you the most.
Cutting expenses on a low income should be focused on making a more significant impact. You can cut back on those smaller expenses like canceling your cable, but you need to do more. Look at the big expenses that you have each month and think of ways to save money there. For example, consider renting out a room, living with roommates, downsizing, or refinancing to cut down housing costs.
Save Money on Food
Food is one of the biggest monthly expenses that a person has. To slash grocery bills, use some of these tips below:
- Make a grocery list based on your weekly menu plan.
- Plan by checking ads to see what’s on sale and use coupons
- Buy produce in season
- Brown bag your lunches
- Frozen, canned, or dried versions of food will last longer, typically hold the same nutrition value, and are less expensive
- Buy generic brands