words Alexa Wang
Saving isn’t easy, and it’s even harder for younger generations that have higher amounts of debt. But with the right financial plans, saving can become second nature. It’s also much easier to save when you know exactly what you need to save for.
Here are three things that millennials should be saving for ASAP.
Saving for retirement doesn’t come easy for millennials. In fact, there are a lot of unknowns for younger generations. Not only is it harder to save because of student loans and lower wages, but there’s also no guarantee for millennials that Medicare or Social Security will be available decades from now.
One study found that 54% of female millennials and 43% of males found that their finances were stretched too thin and that saving for retirement was impossible.
This makes it even more important for millennials to start saving for retirement as early as possible. Just saving $50 a month is better than nothing at all. Any money put into a retirement account will accrue compound interest, and the more money that’s saved, the more interest that will be earned.
2. Purchasing a Home
Buying a home is a big part of the American dream. There’s no better feeling than having something to call your own. But buying a home isn’t cheap.
Millennials need to save up enough money in order to afford a 20% down payment. Without a large down payment, your monthly costs will include private mortgage insurance (PMI). Over the life of a loan, PMI can cost tens of thousands of dollars.
Though it can be hard to save such a large down amount of money, the months of saving truly pay off in the long term.
3. Money to Pay off Student Loans
Student loan debt continues to increase. In fact, in 2018, student loan debt reached an all-time high of $1.52 trillion. This is more than a 140% increase compared to levels 10 years ago. Most young Americans graduate with more than $38,000 in debt.
This means that younger generations need to budget in order to pay off student loans as quickly as possible. While most loans offer low-interest rates, it’s never easy to carry around such high levels of debt for years and years.
Ways to Make Saving Easier
Now that you know what you should be saving for, it’s even more helpful to know the steps you should take in order to save as much as possible.
Work With a Financial Advisor
One of the best ways to ensure you achieve your savings goals is to hire a financial advisor. What’s beneficial about financial advisors is that they not only help with investing your money, they’re experienced in helping you to develop a plan that enables you to meet all of your financial goals.
With the right financial plan, you can not only save money, but you can make smarter decisions that allow you to build a solid financial standing. No matter where you live, there are plenty of financial advisors to choose from. In fact, online you can compare the best financial advisors in your area to be sure you’re getting the best service possible.
Automate Your Savings
Another way to make saving easier is to automate savings as much as possible. If you want to save money for retirement, ask your employer to automatically take out a set percentage or dollar amount each paycheck. This way you’re able to put money into savings before it ever hits your account.
You can also automate your savings by setting up automatic transfers through your bank. Make an effort to put at least $100 into your savings account each month. By the end of the year, you’ll have saved at least $1200. Using automatic transfers, you can effortlessly build your savings account for a backup fund or vacation to Florida to soak up some sun.
The less you spend, the more you have available to save. Budgeting isn’t fun, but it’s necessary if you’re serious about saving money. The good news is that you don’t have to track every dollar you spend using pen and paper. These days there are all sorts of mobile apps that allow you to keep track of your money, even when you’re on-the-go.
Some mobile apps that are designed for convenient and flexible budgeting include:
- You Need a Budget
By using a personal budgeting app, you can keep better track of your money from anywhere at any time. With the right app, you can automatically pay your bills, keep track of your credit score, and keep an eye on your loan amounts month to month.
Saving is hard, but it’s even harder for younger generations who face higher amounts of debt and lower incomes. But by knowing what to save for and how to make saving easier, you’re much more likely to meet all of your financial goals now and in the future.