Saving in your 20s while surrounded by ongoing social events, work commitments and the pressures of try to adult and hopefully move out from under mum and dad’s roof is a challenge - but this doesn’t mean it can’t be done. With good planning and dedicated saving habits your future will look a lot brighter!
So here are some tips from a 20- something year old who is currently saving for the deposit for my first home and a Euro trip…(one day!)
1 Stop relying on the bank of ‘Mum & Dad’
NEWSFLASH - your Mum and Dad are not your personal loan advisers.
Constantly loaning money from your parents will stop you from learning how to save on your own and it can create some quite awkward family situations...especially when your parents bring it up 2 years later at a family dinner about that one time you didn’t have enough money to pay your car rego.
Get out of the habit of asking or expecting your parents to fit the bill - TODAY!
This is the first step to your financial independence.
2 Budget - Plan for short-term and long-term goals
Saving for a long-term goal can be boring - set savings milestones with short-term goals or mix it up with both a short-term goal e.g. weekend away and a long-term goal e.g. overseas holiday.
3 Save your change - every dollar counts!
Set up an empty coffee jar and write your savings goal on the front in sharpie. Not only will this focus you towards saving your change, you can watch your savings grow dollar by dollar!
4 Make regular, set contributions to your savings account - and don’t touch it
Open a bank account that rewards you with added interest for not touching it. I personal have opened up two Goal Saver accounts with Commbank for my 2017 saving goals and have not looked back. By setting a weekly amount from my pay to contribute to the account (10% of my wage) I am able to plan my budget until next payday and still make bank with a deposit into my savings account and doesn’t it feel good!
5 If you don’t NEED it - don’t BUY it
Avoid unnecessary trips to the shops and avoid Kmart at all cost! If you don’t need it - don’t buy it. Prioritise what you need right now in your life and remove any unused subscriptions, memberships or direct deposit payments that are quietly siphoning your savings account.
6 Become friends with the idea of accepting hand-me-downs
Hand-me-downs are friends not foe! You may be surprised about what your friends and family have that they want to get rid of. It comes in handy when facing the prospect of moving out of home and researching the cost of furniture and appliances. Ask you family and friends first. There are even Facebook pages dedicated to local buy and sell groups and garage sales in the local area.
7 Do your research- find better value alternatives
Don’t settle for the first option. Do your research and get the best deal possible.
For example, it may seem out of place however if you negotiate with someone on the price of say a new TV they are more likely to give you the best price they can do to make a profit and keep your sale. My advice: play hard to get.
Also swap out unnecessary costs for cheaper alternatives such as swapping cafe lattes to instant coffee. With a standard cup of coffee now costing $3-$4 dollars, that’s a saving of $15.00- $20.00 per week!
8 Create an emergency fund
Budget in a buffer amount into your weekly spending. By including this buffer you will prevent your accounts from being overdraw (eekk!) and it will provide you with an emergency fund that can build over time.
9 Use a shopping list...and NEVER shop when you are hungry
Science has found that you are likely to spend % more grocery shopping if you are hungry while at the local store. So make sure to have a meal before parading the aisles for tasty treats!
Shop smart by create a list at home before going to the store - I find it easier to use a mini whiteboard on my fridge and simply take a photo of it at the end of the week. Filter out the things that can wait until the next shopping trip and focus on buying ingredients that are long-life and fit into your meal plan for the week e.g. a large piece of pumpkin can be used for a soup throughout the week and roasted for Sunday’s roast.
10 Build your credit history
Black marks on your credit history can prevent you from getting a mortgage on your dream home after saving for the deposit on your first investment or home.
Get your credit history in check - pay any outstanding debts and don’t sign up to payments you cannot meet e.g. personal loans, mobile phone plans etc. Now focus on building your credit history. Sign up for payment schemes in your name i.e. loans, finance etc.
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