Unfortunately, schools don’t do a great job of teaching students how to manage and save money today. Some millennials (one in six, according to a recent study) have done a good job of saving money, while the majority (67%) have little to no savings at all. Many young adults watched their parents struggle with credit card debt, an unstable housing market, and trying to live within their means while providing for their families. While they don’t want to follow in those footsteps, many millennials are weighed down by excessive student debt and the high cost of renting, making saving a down payment to purchase a home a seeming impossibility.
How can they possibly save half their income when that percentage is already going toward rent every month? What exactly can 20-somethings do to start saving money while still living a normal lifestyle? Here are some tips for the millennial who wants to start building their savings.
Double up. If you’re spending half your income on rent, it’s time to start looking for a roommate. In most situations you can enjoy a larger apartment for less money when you split the cost of rent and utilities between two or more people. This is one of the biggest ways to save on the cost of living in a city, which millennials seem to prefer over living in the suburbs.
Be smart about credit cards. If you decide to use a credit card, get one with a zero percent interest rate, no annual fee, or a decent rewards or cash back service. If you’ve already racked up a high balance on a credit card with a high interest rate, find a balance transfer card with a zero percent APR that can help you save on interest charges and pay off the credit card debt you already have faster. If you’re using a credit card to help build your credit score, don’t charge more in a month than you can pay off when the bill comes in. One way to ensure you can always pay the balance in full at the end of the month is to pull the money from your checking account and put it in an envelope or a separate savings account the day you make the purchase. If you can’t afford to pay the balance off every month, you should not be charging it to a credit card.
Make small changes. You may have heard that adjusting your thermostat can save you money on your utility bills, and the good news is that turning down the thermostat does indeed lower your overall heating bill. According to Energy.gov, to save money on your winter heating bills simply set back the temperature at least 8 degrees for 8 hours or longer. The U.S. Department of Energy estimates a savings of between five and 15 percent can be realized by lowering your thermostat by 10 to 15 degrees for an eight-hour period. Whether you do this while at work or while you sleep, that small savings can add up to hundreds of dollars. A 15% savings per month on a $250 heating bill amounts to $30 every month, which adds up to $180 over six months. You’ll spend a lot less than that on a cozy Sherpa throw or electric blanket!
Shop second hand. It’s so easy to order items online and have them delivered to your door, but you can save a lot of money by shopping thrift stores, yard sales, estate sales, moving sales, and neighborhood swap or giveaway websites. If you live in an area with a lot of military families, you can snag some great deals when family members are deployed or relocated and need to lighten their load of household items like large appliances, furniture, clothing, baby items, tools, lawnmowers, snow blowers, bicycles, and other treasures.
Be creative with your social life. A night out on the town can be thrifty and still be fun. Look for cheap to free activities in your town that offer different types of entertainment from a Friday night art walk with free appetizers and the chance to meet local artists and tour local galleries to a free night at the museum, a walking tour of your city’s downtown or historic area, free concerts, free tickets to movie premiers, open mic night at a local pub, karaoke contests, or a new artist showcase. The possibilities are endless; check out your local arts and entertainment publication (also usually free) for events unique to your city.
From sharing your living space to learning to live without a car, saving on credit card interest charges to saving on utility bills, buying used household items to finding ways to have a fun night out with friends without blowing your budget, we hope that by sharing these six savings suggestions we’ve proven that there are lots of ways millennials can make their dollars stretch and start saving for the future.