Are Millennials really killing everything…?
Every week, you see another bogus headline about millennials killing something. Whether it be the housing market by buying avocado toast, food chains that are just super old or a tad outdated, or golf (really? Who plays golf anymore?); we’ve managed to kill it all. But, the one headline I’ve yet to see is “Millennials are killing savings”; and by killing I don’t mean it’s dying – I mean we’re killing it, we’re ahead of the generations before us. According to a study by Merrill Edge, 63% of millennials prefer to save for ‘financial freedom and flexibility’ unlike Generation X who aimed to save for the traditional house, family, and retirement. While those things are still important to some of us, we’re all for living our best life right now.
Millennials are simply gravitating towards different trends. This comes at a time where most of Generation Y has accrued nearly $40,000 worth of student loan debt by the time we graduate college and are making nearly 20% less than what our parents did at this stage in life. It seems almost impossible that nearly 31% of us save 6-10% of our income and 18% save more than 10%, but it is possible. However, there is a large percentage of GenY that doesn’t have more than $1,000 in savings at all.
For those of us who may need a little guidance or help with saving, here are some tips to help you jumpstart your rainy day fund.
- Make a Plan and Set your Goals
Map out your plan for yourself for the next year, 3, years or even 10 years. What are some goals you want to achieve? Do you want to save $10,000 in the next year? Pay-off $20,000 worth of debt in the next 3 years? Your plan and goals are based on your idea of the best possible life. Take time to write these all out and set your targets based upon these goals. For example, you have $60,000 in debt and you want to eliminate $20,000 in 2 years – How will you achieve that? You will need to set aside roughly $850 each month; this is your monthly target.
- Create your Budget
The importance of a budget is to help you make a plan for your monthly spending. By prioritizing your needs and wants you can ensure you have enough money for what’s important to you. Create your monthly budget by tracking your fixed and variable expenses for the month in a spreadsheet or app such as Mint.com. This will allow you to see exactly how and where you are spending the majority of your money and what is leftover for the month.
- Keep your Savings Separate
A separate savings account has literally saved me from myself. When I graduated college, I transferred all of my money from the account my parents had access to, to a separate account that gave me a checking and savings. As I was beginning to save money, I found myself stealing from…myself. There would be money available in my savings and I’d use it and say “Oh, I’ll replace it later” when in reality, I never ended up replacing – just taking more until there was none left. That’s when I knew I needed s separate savings account. There are many types of accounts that don’t allow you immediate access to to your funds. Online savings accounts, accounts that don’t allow you to have card access, accounts that you penalize you if you take money out before a certain time period, or don’t keep the minimum in the account. I personally, opt for an online interest bearing savings account that offers me access in case of emergency; meaning I can get to my money, but it will take a few days before it transfers. This allows me to thoroughly think through my “emergency’ purchases before making hasty decisions. For ideas on some of the best online savings accounts, NerdWallet has a detailed article.
- Automate your savings
Once you open that separate savings, set up a direct deposit into that account; this allows the money to go directly from your check to your ‘can’t touch’ savings. Most companies will allow you to do this directly from your paycheck for various accounts making the process easier for you. If you cannot set up this extra account, set a reminder in your phone to transfer the money each payday or see if your bank can automate the process for you.
- Consider an Interest-Bearing Account
Interest Bearing Accounts pay the owner of that account interest for using the bank’s services. Although, these are not extremely high rates, they still offer a type of ‘reward’ and who doesn’t want free money? Other interest bearing accounts include money market savings accounts or a certificate of deposit (CD), both follow certain rules for starting an account or withdrawing money, but this shouldn’t deter you from researching them as a back option.
While millennials aren’t the worst generation at saving, we could stand to make more of an effort to be for forward thinking. Continue to live your best life, but keep your future in mind!