5 Clever Ways to Start Saving as a Young Adult
Saving money seems to be a lost art, not only in the world of highschool and college students but also among adults. It's difficult to say "no" when you have the money to purchase something you want, just sitting there in the bank. But prudence in spending means security for the future (Geeze, I sound like Ben Franklin). It is estimated that over 75% of Americans are living paycheck to paycheck, without enough saved to even last six months without income. Saving when you have a full-time job, a family and a mortgage is a radical departure from saving when you live in a dorm room as a college student, so I'm going to stick to what I know.
Here's 5 easy ways to start saving as a young adult:
1. Match Spending
Each time you spend money under $30 (you can adjust this threshold if need be), match that expense in your savings account. By simply matching your spending habits, you'll derive more benefits than you might have counted on.First of all, we college students tend to have pretty regular habits and - let's be honest - we like our coffee. If we tend to swing by Starbucks every morning, we're saving anywhere from $2-$6 every day. Americans, on average, spend upwards of $1,000 each year on coffee. That's an extra $1,000 in your savings account. An average of $2,700 is spent on eating out - that's $2,700 in your savings account. By years end, simply by matching food and drink expenses, you've amassed nearly $4,000 in savings. And that's before you account for groceries, movie tickets and clothes.Secondly, by forcing yourself to move double the money out of your "safe to spend" account (half to the purchase, half to savings), you begin evaluating your expenditures. Purchases may not seem so important all of the sudden.
2. Order Water
When you go out to eat, order a water instead of a soft drink, tea or or alcohol. Check the menu - whatever money you ordinarily would have spent on a drink, add it to your savings account. Often, this can account for $3-$10 per meal, depending on your drink preferences.
3. Leverage Reoccurring Expenses
There are plenty of apps out there to help you save money on groceries and utility bills. You can't eliminate them since these are reoccurring expenses, so do what you can to leverage their existence. For example, download the app, Checkout51, and get cash back, simply from buying certain groceries you're going to buy anyway.
4. Round Up to the Nearest Dollar
Round up purchases to the nearest dollar and invest the change using an app called Acorns. I've been using it for a couple of months now and, not only have I saved over $70 that I wouldn't have ordinarily, I've even made a few bucks as well.
5. 30-Day Rule
Cut back on impulse buying by using the 30-day rule. If you want to make a purchase over $50, come back to it in 30 days. If you still believe it to be a good investment, go ahead and buy it. Often, our minds perceive something as having greater value at the outset and then we regret our decision a month, a week or even a day later. This is called buyers remorse and is rooted in cognitive dissonance which is when a person is mentally torn between to ideas, values or opinions. When someone believes that their money could have been better spent, they regret having made the impulse buy. In America, consumers spend nearly $2,400 on impulse purchases - a majority of which the buyers regret soon afterwards.
Most things will still be around in 30 days - you can wait.
This year, work on being responsible with your money. It feels great to look at your bank account and see $$$. With enough small wins, you might gain enough momentum that you find it a fun challenge to see how much you can save by a certain date. Best of luck - may we all be filthy rich in a year!
Jacob Jolibois is the founder of The Archer's Guild. He has a habit of starting a large number of projects and is oddly enthusiastic about Disney. Ultimately, he's hoping to rid the world of mediocrity, lots of people at a time (one is too slow). Recently, he backpacked across 11 countries with Micah Webber.