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Savings Tips Help Millennials Get Serious

This is young adults’ financial dilemma in a nutshell: you’re well aware you should be saving money, but you admit you’d rather spend it on the fun stuff.

Yes, paying the rent or student loans every month takes discipline. But it isn’t enough. Even more discipline must be summoned to save money, whether in an emergency fund or a retirement plan at work.

Tia Chambers' headshot

Tia Chambers

Tia Chambers, a financial coach in Indianapolis and certified financial education instructor (CFEI), has put some thought into how Millennials can overcome their high psychological hurdles to saving.

The 32-year-old lays out six doable steps on her website, Financially Fit & Fab, which she recently elaborated on during an interview.

Get in the right mindset. “It is the hardest part,” she said. “When I speak with clients, money is always personal, and it’s also emotional.” The best way to clear the emotional hurdles is to keep a specific, important goal in mind that continually motivates you, for example buying a house. Or create a detailed savings challenge, such as vowing to save $1 the first week, $2 the second week, $3 the third week, etc. This adds up to $1,378 at the end of the year, she said.

Cut expenses. Some cuts are no-brainers. Scrap cable for Hulu and Netflix subscriptions. Drop that gym membership you never use. The biggest challenge for young adults is saying no to friends who want to go out for dinner or drinks. Chambers suggests enlisting your friends to help – after all, they’re probably spending too much too. She and her friends have agreed to go out one weekend and save money the next weekend by hanging out at someone’s apartment. Another idea is happy hour once a week instead of twice.

Track where your money is going. Only 40 percent of Americans stick to a budget. At a minimum, learn where your money is going. One of Chambers’ clients recently examined her spending and realized that she’d spent $700 on food and entertainment the previous month. “That was a lot of money,” Chambers said. She suggested that her client cut that back to $400 per month – not an overly restrictive entertainment budget but one that would result in $3,600 in savings at the end of the year.

Save automatically. It’s so much easier to save if you never see the money. A 401(k), by reducing take-home pay, is the classic form of forced savings. Workers just learn to deal with the consequence of having less disposable income. This technique can also be applied to a regular savings account by scheduling an electronic transfer of money to the account each time a paycheck is deposited.

Hold Yourself Accountable to Your Goals. You’re the only one who can do this. Chambers suggests putting a reminder on the calendar. She found something else that works for her. A yellow post-it note stuck to her computer says, “Take cash out for the weekend.” “When my cash runs out,” she said, “my spending is done.”

It’s a new year. Give it a try!

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6 Responses to Savings Tips Help Millennials Get Serious

  1. Robin Williams says:

    Some great tips, but the problem for millennials can be surmised in one word: rent.

  2. Chuck Miller says:

    Actually…it’s delayed vs immediate gratification. Knowing what to do versus doing it is a huge gap.

  3. Ellis says:

    Millennials have another big problem besides rent. It’s student loans. I know several who have loans of $60,000 or more — some who have much more in loans. Loan payments for amounts like that are crippling, when at the same time they are at the traditional age of family formation and home buying.

  4. Mike says:

    Easy credit is the Achilles heel for many as well. Using plastic instead of green dollars makes it seem less real. Oh yeah, don’t get caught with a mobile phone that’s several years old either, that’s demeaning (sarcasm).

  5. Larry Kantor says:

    It’s hard to save for retirement when you’re paying 45% of your wage on rent for a shared 1 bedroom apartment with 2 other people. In urban areas and cities like San Francisco, this is a reality. For others, a budget can be a life saver: How To Make A Budget

  6. Brian says:

    A few solutions that should have been considered first:
    – don’t go to “that” expensive university just for the college experience.
    – go to a local community college the first two years (1/3 the cost; 1/3 the debt)
    – live with parents during college (less debt for room/board)
    – get a degree in a field that pays a high enough salary to afford to easily pay back the loan. They’re out there: https://www.glassdoor.com/blog/50-highest-paying-college-majors/

    If they really have to do something that’s their passion, they can always do it after hours or on weekends while they’re making real money to keep a roof over their heads, afford food and other necessities, pay back their student loan, etc.

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