4 Best Ways To Save Money In Your 20's
THE LOGIC OF MONEY
SEPTEMBER 26, 2019
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So you told yourself once you got that first big paycheck that you would start saving some money for your future… and then came rent, a car payment, groceries, utilities, nightlife, credit card bill, and you were left searching through old pants pockets looking for spare change at the end of the month.
If this sounds familiar or if you just don’t know where to start saving, don’t worry. We got you covered.
Save Money For An Emergency Fund
I’m sure you’ve heard all the advice about starting to invest or put money away for retirement right away. Yes, this is great advice considering the most beneficial thing in your financial life will be compound interest.
However, before you do this, you need to build up a nice comfortable emergency fund.
Life is unpredictable. You could injure your knee playing rec league basketball and need expensive surgery. Maybe you lose your job and have no income. You may have unexpected issues with your home that need expensive fixing.
If you have all your cash tied up in investments or retirement accounts, that’s great for your future, but you need to expect the unexpected (cliche, I know) and plan for now first.
Each person’s emergency fund goal will be different depending on how healthy you are, relationship status, if you have kids, how stable your job is, etc.
Regardless, you should try to build up a couple of month’s worth of living expenses just in case something does happen to go wrong.
Save Money For Your Short-Term Goals
Make a list of short-term goals that you want to accomplish in the next 5 to 10 years. Do you want to save up to buy a house? Are you planning on buying an engagement ring? What kind of wedding do you want to have? Do you plan on starting a family?
Once you have your list, go through and do some research or estimate what the cost of each goal will be. It’s okay if you aren’t exactly right but try to get a good idea of what everything costs.
Then take a look at your spending and see if it aligns with these goals. You may need to forego that extra coffee on Monday morning, or that last shot of tequila on Saturday night to meet these goals.
Start Investing Your Money
Now that you have started to establish your emergency fund and you have laid out your short term financial goals, start investing your money.
Investments are key to making your money work for you. The old saying “the rich get richer” couldn’t be more true. The wealthiest people got to where they are because they know how to make their money multiply.
Another great app to use is Acorns. This app takes your spare change and invests it for you.
Start Saving Money For Retirement
Finally, start putting money away for retirement. The earlier you can do this, the better. More and more people are entering the retirement age with little to no money saved. Do not be one of those people.
Some experts are saying that Generation Y will need to save between $2-3 million for retirement. The longer you wait to start saving, the more money you will need to save.
Let compound interest be your friend!