In my college years, I never had to worry about finance thanks to a generous scholarship. I poured money down the drain by spending all my stipends on food, clothes, and tech gadgets. Sounds familiar? A survey from the American Institute of Certified Public Accountants (AICPA) shows that more than ¾ of millennials want to have the same clothes, cars, and tech tools as their peers. At the same time, nearly half of them say they aren’t saving enough money.
Truth be told, young adults like us wrestle with saving money pressured by social media and an uncertain economy. Whether or not you were born affluent, it’s crucial for us - millennials or Gen Z - to start building a saving habit. Why? Let me elaborate on this.
Saving empowers you to reach your dreams.
Have you ever drooled over an exotic vacation, a cool house, or started planning for your marriage? No matter how big your dream sounds like, you can act on it NOW by starting to save. This is especially true for millennials. According to a recent T. Rowe Price survey, 43% of millennials say they expect to retire before 65, which is much earlier than their previous generations.
For us young people, the greatest advantage is time. Remember the magic formula? Invested money + time = magic. It doesn’t matter how old you are and how much you earn. The key is starting small and saving regularly. Better yet, you might consider investing a small amount every month continuously. As Chris Hogan, a personal finance expert put it, “You want your money to hang out with these two best friends: time and compound interest.”
Savings gives you a safety net.
You might wonder, what’s the point of saving if saving account rates kept falling? It’s true that most banks pay less than 1.5% today, but that doesn’t mean we should give up the habit of saving completely. Let’s take the example of COVID-19. Based on data from a pool in early April, those between ages 18 and 29 have been the most affected by layoffs, with 35% reporting at least one member in their household has lost their jobs. That young cohort has been most affected by pay cuts as well.
Imagine if you were the one who lost your job or became infected by COVID-19, would you wish that you had an emergency fund to cover your living expenses before you get back to work? While we rarely think about safety nets when things go well, an emergency saving fund can keep our heads above water. If you don’t have one yet, time to save for it!
Saving prevents dependence on credit cards.
For those of you who recently graduated, student-loan debt could feel like a burden. Surprisingly, a quarter of millennials say most of their debt is credit cards, not student loans, according to a survey from Northwestern Mutual. What’s more, 22% don’t know their credit card interest rates.
Depending on credit cards is bad as their interest fees cost you an arm and a leg. Default on payments could also jeopardize your credit score. But there’s always a solution. Saving enables you to tighten up your budget and cut back on non-essentials. Not sure how to start? Talking to a financial planner could help you stay right on the money.
If you were like me in my college years, time to stop breaking the bank and start tightening your belt. It’s never too late to save for yourself. Doing this helps us reach our dreams, provides us with a safety cushion, and frees us from debts. So, consider setting your savings goals today!
Truth be told, young adults like us wrestle with saving money pressured by social media and an uncertain economy. Whether or not you were born affluent, it’s crucial for us - millennials or Gen Z - to start building a saving habit. Why? Let me elaborate on this.
Saving empowers you to reach your dreams.
Have you ever drooled over an exotic vacation, a cool house, or started planning for your marriage? No matter how big your dream sounds like, you can act on it NOW by starting to save. This is especially true for millennials. According to a recent T. Rowe Price survey, 43% of millennials say they expect to retire before 65, which is much earlier than their previous generations.
For us young people, the greatest advantage is time. Remember the magic formula? Invested money + time = magic. It doesn’t matter how old you are and how much you earn. The key is starting small and saving regularly. Better yet, you might consider investing a small amount every month continuously. As Chris Hogan, a personal finance expert put it, “You want your money to hang out with these two best friends: time and compound interest.”
Savings gives you a safety net.
You might wonder, what’s the point of saving if saving account rates kept falling? It’s true that most banks pay less than 1.5% today, but that doesn’t mean we should give up the habit of saving completely. Let’s take the example of COVID-19. Based on data from a pool in early April, those between ages 18 and 29 have been the most affected by layoffs, with 35% reporting at least one member in their household has lost their jobs. That young cohort has been most affected by pay cuts as well.
Imagine if you were the one who lost your job or became infected by COVID-19, would you wish that you had an emergency fund to cover your living expenses before you get back to work? While we rarely think about safety nets when things go well, an emergency saving fund can keep our heads above water. If you don’t have one yet, time to save for it!
Saving prevents dependence on credit cards.
For those of you who recently graduated, student-loan debt could feel like a burden. Surprisingly, a quarter of millennials say most of their debt is credit cards, not student loans, according to a survey from Northwestern Mutual. What’s more, 22% don’t know their credit card interest rates.
Depending on credit cards is bad as their interest fees cost you an arm and a leg. Default on payments could also jeopardize your credit score. But there’s always a solution. Saving enables you to tighten up your budget and cut back on non-essentials. Not sure how to start? Talking to a financial planner could help you stay right on the money.
If you were like me in my college years, time to stop breaking the bank and start tightening your belt. It’s never too late to save for yourself. Doing this helps us reach our dreams, provides us with a safety cushion, and frees us from debts. So, consider setting your savings goals today!
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