Saving money is getting harder and harder for young people. Everyone is feeling the pinch of rising costs and stagnating income, but younger generations face financial challenges like no other before. Sky-high rent prices, massive student loans and the ever-increasing cost of living are just some of the obstacles young people face when trying to save money.
In this article, we’ll delve into how you can boost your saving efforts despite all the challenges you may be facing.
Table of Contents
Budget every month
If you aren’t already, you need to be budgeting your money every month without fail. This gives you two things: oversight and control of your money, including your income, outgoings and whatever is left.
The basic process of budgeting is listing all your outgoings and taking them away from your income to see what you have to spare. If you’ve no disposable income and are paying for things you can’t afford with cash, you’ll be accumulating debt and this isn’t good. To save more, you need money left over after all your expenses have gone, so you should be looking to cut your spending if possible.
Pay off and avoid debt
Debt is your worst enemy if you’re trying to build savings, especially if it’s the high-interest kind. For twenty-somethings, it often comes in the form of credit card balances, quick loans and buy now, pay later agreements. The good news is that paying off what you owe and staying out of ‘bad debt’ is a great way to build your credit history.
Debt simply chews up your income and gets more expensive the longer it remains – so clearing it and avoiding it should be your first port of call before trying to save. Pay the highest-interest debts first to avoid taking on more additional interest until it’s cleared. With no debt, you’ll have more money every month to put towards savings.
Open the right accounts
Using the right bank and savings accounts is key if you’re looking to accumulate funds and make the most of them. Any savings should be in an account that offers interest, so you’ll get a little bit every month just for having funds put aside. A Lifetime ISA (LISA) can be useful if you’re looking to maximise your funds towards buying a house, with a government bonus being added when you save.
Don’t forget current accounts can reward you too. Certain banks offer cashback on everyday spending, so you can put more towards savings just by simply spending. Careful not to spend just for the sake of it, though.
Think long-term
Boosting savings ultimately takes some long-term thinking and willingness to sacrifice in the short term. If you’ve wondered what the term ‘delayed gratification’ refers to, this is exactly it.
If you’re saving towards buying a house or simply to improve your financial security, think about what things you may be wasting money on unnecessarily. And consider which luxuries you may be able to sacrifice in the bigger picture of building your savings.
How could you improve your saving efforts?
