For many 20- and 30-somethings, financial matters seem to be a constant struggle. Between student loans, low wages, and a lack of affordable housing, it’s no wonder that more U.S. households are now headed by renters than at any point since at least 1965. Millennials are holding off on buying homes, getting married, and having kids for far longer than prior generations — and at least part of the reason is a lack of capital.
“It’s getting harder than ever for young people to earn as much as their parents did at the same age,” explains Camilo Maldonado of The Finance Twins. But not all is lost, he adds: “While the data isn’t pretty, that simply means you need to be more aggressive with the amount of money you save and invest.”
And Logan Allec, a CPA and personal finance expert from Money Done Right, points out that investing is “becoming more and more accessible every year. For example, most of the major online brokerages now offer commission-free trading, making investing easier than ever.”
But it may seem nearly impossible to save any money (much less invest it!) when you’re living paycheck-to-paycheck, as 62% millennials are. But there may be some simple ways to save major money that you’re inclined to overlook. Here are just a few expert tips that will provide a more comfortable financial cushion and even allow you to start squirreling money away for the future.
Use Budgeting Apps
Establishing a budget is key for all adults, regardless of generation. It might sound like a bore, but this is really the best way to get a handle on your spending and alleviate dire financial situations. Fortunately, you don’t have to create intricate spreadsheets to conduct these calculations or track your expenditures. These days, there’s an app (or several) for that.
As Tracie Fobes of Penny Pinchin’ Mom explains, “Track every penny you spend. It is so easy to swipe and before you realize it you’ve spent too much. It is the same with both debit and credit cards. It is imperative to monitor your spending by using apps or recording your purchases so you never worry about spending more than you should — and then blow the budget!”
Apps like Digit, Acorns, Qapital, Mint, and others can automatically track your expenses, send you reminders to pay bills on time, transfer money into your savings account, and even round up your purchases to invest the change over time. Best of all, these apps provide a relatively passive way for you to save money — whether it be warning you about impulse purchases and overspending or sending anywhere from a few cents to five dollars to other accounts to remain untouched. You might be surprised by just how effective these smartphone apps are in allowing you to become more financially stable.
“One of the best money hacks to save money this summer is by putting your savings and investing on autopilot,” says Brian Meiggs, Founder of My Millennial Guide. “In the digital era, the technology works with you by making saving and investing money a habit. By putting the investing process on autopilot, this can actually manage your bad spending behaviors. You can benefit from automated saving decisions in order to not overload your mind with a plethora of saving and investing decisions. My favorite app that allows you to invest your savings is Acorns. Acorns automatically invests your spare change, so you can invest without thinking.”
Says Marc Andre of Vital Dollar, “One of the easiest ways to save money on the things you need to buy is to use a good cashback credit card and take advantage of cashback apps and websites.”
You can also use apps to monitor your credit score. Says CompareCards.com Chief Industry Analyst Matt Schulz, “Whether in your personal life or for your business, your credit really matters. Crummy credit can cost you thousands of dollars over the years in the form of high interest on loans, so it is really important to make sure that you keep your house in order.”
Shop the Smart Way
You don’t necessarily have to become a die-hard minimalist, but you might want to take inventory of what you already have and think carefully about purchases you make. After all, U.S. households have an average of 300,000 things inside. Do you really need another piece of decor or a cheap clothing item? Even if there’s a major sale going on at your favorite store or you find an incredible promo code for online use, that doesn’t mean that getting a great bargain should justify your spending — particularly if the item isn’t truly a necessity. Although 40% of U.S. internet users say they purchase items online several times per month, you might need to rethink your online shopping habits (and the motivation behind your purchases) if you’re serious about saving.
As Jaquetta T Ragland of Young and Finance says, “Work the system… don’t let the system work you. Meaning, for instance, coupons can save families and individuals a lot of money, but not if you’re going to buy items you know you will never use.”
In other words, you should stick to the shopping list and plan out purchases ahead of time. Christine White of The (Mostly) Simple Life says, “Never leave the house without a full water bottle and a snack in your bag (like nuts or a piece of fruit). I can’t imagine how much money I’ve saved over the years by avoiding the drive thru when I’m out and about and get a bit hungry or thirsty.”
Rather than falling victim to an impulse buy or sticking with a certain brand for the sake of tradition, exercise some discipline and take some time to find “dupes” that will allow you to save money without sacrificing on quality. Forgoing your daily Starbucks order, as cliche as this advice sounds, can allow you to save thousands of dollars a year. If you find you’re not able to window shop without going through the check-out line, you might want to resist the trip altogether until you really need something. And if you’re a sucker for a good deal but you can’t afford to spend, you might want to think about doing something besides shopping on Black Friday this year.
Invest More Into Retirement
Approximately 62% of Americans say they’re behind in saving for retirement — and millennials typically fall into that camp. Shockingly, 40% of people surveyed by U.S. News can’t afford basic necessities. And if millennials can barely afford their rent or other non-negotiables, it’s no wonder that they feel they have no way to save for the future.
But it’s entirely possible you’re leaving money on the table. Explains David Rae of DavidRaeFP.com, “The hardest part is getting started. Take action today, and make sure to contribute at least enough to get the full employer match of your 401(k). It can be like doubling your money overnight.”
Many employers that offer 401(k) retirement plans will also offer matching, meaning that the percentage of your salary you contribute to this investment will also be matched by the company. This can double the amount of money in your 401(k) — and while your take-home pay will reflect this change, you can mitigate the impact by budgeting properly.
Audit Your Automatic Payments
Millennials love a subscription service, whether it be for entertainment streaming or easy cooking. But while these services offer ample convenience, those payments can add up quickly. That’s especially true when there are services that are no longer being used but that haven’t been canceled. And unless you keep constant tabs on your PayPal or bank accounts, those fees are easy to miss. Whether you haven’t been to the gym in almost a year or you simply aren’t watching enough shows on Netflix anymore, it’s time to be honest with yourself about whether you want to keep paying $10 to $150 a month for a service you don’t really use. If you’re not dependent on your Spotify subscription or you find that your Stitch Fix boxes haven’t lived up to your expectations, it’s time to start canceling. You may also want to set up automatic reminders to cancel trial periods (which can quickly turn into expensive monthly fees) to keep this from happening in the future.
Financial woes can cause a lot of anxiety for millennials, but don’t be intimidated by the idea of getting a handle on your spending. In many cases, this can be a DIY project, as John Schmoll of Frugal Rules explains: “The biggest challenge I see with personal finances is just starting. Many believe they need to be an expert or have a lot of money to accomplish something positive with their money. That’s just not the case in most situations. In many cases, you simply need to take a step and allow that to create the confidence needed to continue.”
Ultimately, as Carly of Mommy on Purpose puts it, “All the tips in the world for spending less won’t ever solve money problems they way that making more does. And it doesn’t have to be a crazy lot more – even making 200-300$ more per month will add far more to your bottom line the giving up coffee or only buying meat on its sell-by date. Ask for a raise, and if none is forthcoming, find a side hustle.”
With these spend-thrifty tips in mind, millennials (along with older folks) should be able to make small and impactful changes that can increase their financial health and invest in their future.