3 Expert Hacks for Millennials and Gen Zers To Prioritize Saving
Everyone knows that they’re supposed to save; the advice comes often from experts and amateurs alike. But Millennials and Zoomers seem to be struggling more than the older generations.
Bill Ryze, a certified Chartered Financial Consultant (ChFC) and a board advisor at Fiona, said that “with the high cost of living, rising housing demand and student debts, there is little left[over] to save.” It’s not that millennials and zoomers don’t want to save; it’s just that there’s too much else to pay for, and the inflation prices aren’t helping.
A recent “Money Mindset” study from Fidelity Investments found that two in every three young adults (aged 18-44) say that “they should save more but are so stressed about their finances – they avoid thinking about them altogether.” In fact, 59% of the young adults polled cringe at the thought of checking their bank account balance, and 76% believe that in order to save money, they have to cut back spending on the things that bring them joy.
1. Live (and Spend) Within Your Means
One of the biggest motivators to spend money can be FOMO, or the “fear of missing out.” The Fidelity Investments survey found that 61% of Gen Zers admit that FOMO has them spending more than they initially intended, and Millennials are not far behind them. “Don’t let the illusions on social media pressure you into living outside your means,” said Sara DeSantis, an Accredited Financial Counselor (AFC) with AFCPE.org. “You have no idea how much debt a lot of these people go into simply to show off on social media.”
But living within your means does not mean sacrificing the things you enjoy. Rather, it’s about changing your lifestyle to match your income. Spending too much on food? Try eating at home more with a weekly meal plan. Have too many subscription services? Go through your bank statement and unsubscribe from any service you don’t use enough to justify paying for. Work to differentiate between your wants and needs, then cut back on the wants and find discounts for the needs. This will help break the overspending habits.
2. Automate Your Savings
Saving is already hard to do. And if you have to remember to transfer money from your paycheck each month, it’s even less likely that you’ll actually do it. The key to saving is to do it continuously so that your money can compound and grow. For most, that key is already in their hands.
With a few taps on your phone, you can set up repeating deposits or transfers to your savings account. According to Laura Sterling, Vice President of Marketing for Georgia’s Own Credit Union, by automating your savings, “you are less likely to spend the money set aside for savings because you don’t see it in your checking account. This is also appealing because there is no effort needed once the automatic savings is set up.”
Sterling also says, “As a general rule of thumb, 20% of your pay should go into savings. If that’s not possible, start with a smaller amount, like 5%, and gradually work your way up.” On the other hand, Melanie Hanson, Editor in Chief of EDI Refinance, recommends choosing an amount to save that’s comfortable for you. “If you make the focus saving any amount on a regular basis, rather than saving an unworkable amount and encouraging people to give up, you’re going to get much better long-term results.” Whether you decide to save a percentage from each check or a small dollar amount each month, the best way to save is to start.
3. Set Savings Goals
Certified financial coach and CEO/Founder of Deeper Than Money, Chloe Elise, offered this advice: “Don’t just ‘save’ in general. Save for something specific!” Too often, young Americans view the idea of saving money in a broad sense, making it difficult for them to stay motivated. Instead of looking at savings as one large hole to throw money into for a rainy day, create small, achievable goals for yourself. “For example,” Elise continues, “$50 may feel like a drop in the bucket if your savings goal is unlimited, but if you set a goal of saving $500 for a weekend getaway– then that same $50 feels much more impactful. And once that goal has been accomplished, you can either choose to spend the $50 elsewhere, or direct it towards a new goal.”
Ethan Caffrey, a financial advisor and founder of Storific.com, agrees with Elise, saying that, “one of the biggest issues is that millennials and gen zers, like most of society, have not set goals.” By giving yourself something to save for, Caffrey says that you’re giving your money purpose. And if it’s something that you really want, you’ll be surprised by how quickly you can build your savings.
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