Gen Y savings strategies & ways to save money
As I write this, I am sitting on the table with my two younger brothers. We’ve yet to clear away the breakfast debris but resting among the jam and used coffee cups are three Mac computers. Typing away in solidarity on a Sunday morning, to the outsider’s eyes, we must look like the epitome of Generation Y.
I’ve written about the unique world of Gen Y finances before. People of the minute, we are a generation unsuited to thinking of the long-term and we are definitely unused to the idea of saving for the long-term.
Or at least half of us are. According to a survey conducted by the American Savings Education Council, 51% of American youth are saving for a long-term goal. I would assume the number is fairly similar in Australia.
There is no need to add yet another article to the pile of harping missives trying to frighten ‘young people these days’, talking about superannuation and recessions and financial security. Instead, let’s look at what you can do today so when tomorrow arrives (and yes, I know we’re all immortal and there is no such thing as tomorrow and we’ll never get old. Noted), when tomorrow arrives, you will be financially prepared for it.
Overestimate your spending
MSN Money suggests this is a great place to start. Taking into account a youthful proclivity to forgetting the true cost of living, the article suggests that you set your expenses high and you will end up with cash left over, as opposed to having to use your credit card to cover the unexpected costs incurred month to month.
In your financial journal, have two columns. One for expected spending, one for actual costs. You’re aiming to have the actual costs smaller than the amount you budgeted for. That way you’ve got a bit of emergency financial fat, and an amount you can add into your savings account on a regular basis.
Pay yourself first
Out of sight, out of mind. Gen Y is constantly confronted with a new distraction and thinking of the next thing, so why not use that mindset to your financial benefit? Don’t just save whatever is leftover at the end of every week, as recommended above, but also put aside some savings straight up. As soon as your income comes in, set up a direct debit into a savings account.
Don’t do it manually as, while you might be disciplined today, it may desert you tomorrow. Do it first, and you won’t even miss the money.
Spend cash
I know from deeply bitter experience how dangerous a mix newfound independence, youth and a credit card can be. You’ll be saving yourself a whole lot of pain if you learn to live a life paid for by cash as opposed to credit now.
Don’t get a credit card or, if you have one, pay it off and cut it up. I know some people can cope with credit cards but, in my experience, few of those people are in their twenties. Life will end up a whole lot easier in the long run if you learn the importance of cash.
Get your slip on
The government has set up a number of systems to make paying tax and super relatively painless. All you have to do is go with the flow. Check that your employer is signed up to PAYG and that super is additional to your wage. Keep an eye on your payslips, and you should be set.
What financial tips do have for Gen Y?
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One Response for Gen Y savings strategies & ways to save money
All great advice, though I would like to caution young people who are not working full-time (on a set salary) against setting up direct debits of any kind.
Being a casual worker myself, I have come to find that my income is not always constant. I could get $45 at the end of one week (1 4-hour shift) or $400 (how I love public holidays!). As casual workers are not guaranteed a set number of hours, it can be hard to know how much money will be coming in weekly (if any – during the “GFC”, there were weeks when I got no shifts).
If a direct debit is set up and there are not enough funds in the account at the time (also a possibility if your employer is a bit disorganized and your pay is delayed by half a day), the banks will charge you for their trouble (what trouble I’m unsure, as it’s automated, but if they can charge a fee, they will…).
What I’ve done to ensure I’m saving is set an alarm on my phone. It’s set for the day after pay-day every week (very easy to do using the calendar feature), and reminds me to put away money.
