Did you know that in 2019, the average Gen Z adult had $9,593 in debts? In the same year, the average millennial also owed $78,396 in various types of loans.
That difference of over $68,800 is mostly due to credit cards, student loans, and mortgage debts. For instance, millennials hold 3.2 credit cards on average, whereas it’s only 1.8 for Gen Z.
That said, it’s best that you set realistic savings goals now, whether you’re still in your early, mid, or late 20s. It’s not too early to start saving, lest you become part of the 20% of Americans without any savings at all.
We’ll share some of the key strategies to reach your financial goals this year and beyond, so be sure to read on!
1. Review And List Your Expenses
The first step on how to save money in your 20s is to know where exactly your money goes. Making an actual list of your expenses is the best way to do this. Having this list also gives you a clearer idea of not only where your money goes, but how much you spend on each item.
2. Separate Fixed from Variable Expenses
Fixed expenses are those that don’t change, say your apartment rent and loan payments. Variable expenses include those that you spend on restaurants, groceries, and shopping.
You don’t really have a say on your apartment rent, but you can trim most of your other expenses.
3. Trim Away Variable Costs That You Can Do Without
Food costs, in 2018, averaged $7,923 per consumer. $3,459 of those costs were for food away from home, which includes restaurant dining and take-away.
That said, a good way to start saving money in your 20s is to stick to more at-home meals. Even if you cut back just 25% of your food-away-from home costs, you can already save over $800 a year!
4. Put Away “Unnecessary” Fixed Expenses As Savings Instead
Cable TV costs $64 a month on average, while Netflix starts for as low as $8.99 a month. If you can do away with Cable TV, switch to your cheaper alternatives for entertainment. In doing so, you can save over $600 a year.
Read Mroe: 5 Things to Do When On a Budget
5. Pay As Much As You Can Toward High-Interest Debts
List down all your debts and separate them into categories like low- and high-interest. Student loans, with an average interest rate of 5.8%, fall under the low-interest category. Whereas personal loan interest rates vary widely, ranging from 10% to 28%.
Separating your loans in this manner lets you gauge which ones are the costliest. These are the ones you’d want to pay off ASAP, as they will cost you way more the longer you hold on to them.
You should still pay your low-interest loans on time though. Your goal, however, is to pay more than what a high-interest loan’s minimum amount due is. For more info on how to pay off your loans, you can read more here.
Set Your Savings Goals Now So You Can Reach Them Sooner
There you have it, some of the best ways to set, stick to, and reach your savings goals while you’re still young. This way, you can make your life in your 20s more about savings and less about repaying loans. In fact, stick to these saving goals even after you hit your 30s, as they can still help secure your finances.
Ready for more pro tips on financial health? Then be sure to check out the rest of the posts under this site’s Lifestyle section!