If there is one thing we have learned over the years it is how important saving money is from an early age. After all, if you don’t get serious about your money you in your twenties and thirties you can’t possibly hope to save serious money, and that is the key to it all. This may come as a shock to you, but it isn’t how much money you make that matters most; it is how much money you keep and how hard you make that money work for you. That’s the real secret.
Don’t worry, we are fully aware that you are probably rolling your eyes right about now and thinking “what a cliche”. Well, what if we put it to you slightly differently and told you that almost half of all those aged between 18 and 24 have zilch in savings. Yeah, a whopping $0.
So, to help you not become a member of this statistic, we’ve trawled through the best personal finance blogs and come up with a list of top money saving advice we found.
1. Saving money is not easy. In fact, it is an art, something you need to practice over and over again in order for it to become a habit. That’s why it doesn’t matter if you just start saving $2 a week, or less even. So long as you get into the habit of saving while you are still young.
2. Always make sure you have more money coming in than you have going out. The reason for this is overspending is the quickest way to feel the pinch and find yourself in serious trouble. If you want to save money then you have to learn to live below your means.
3. Make sure you have an emergency savings account and only touch it in emergencies. This is what will keep you on track financially because you will have a buffer. Start by saving up a fund of $1000 but try and add to this so you have enough to cover at least three months expenses. You’ll realise how important this money is when you have family to look after.
4. Ten is the magic number. What we mean by this is you should aim to live a life where you can save ten percent of your earnings. That is a good starting point. Obviously the more you can save the better. The ideal aim is to hit the 50-30-20 budgeting rule of thumb. Fifty percent of your earnings should cover essentials, thirty percent should cover luxuries and twenty percent should be saved.
5. Don’t look at retirement as being a long way off. Instead, look at retiring early. That is what having a retirement plan in your twenties will allow you to achieve. By putting money away earlier now, you won’t have to put so much away in your thirties and forties.
6. Employer’s give you free money. Seriously. This isn’t a clever play on words, it is the truth. How so? Well, employer’s offer a 401k match, which more important than you think. Basically, it is where you sacrifice a bit of your salary and your employer matches it. That means you are getting free money dropped into your retirement plan. Winning.