Listen up all you Gen Z and Millennial finance apprentices, this one’s for you. As a younger person, you may be less knowledgeable on how to use money to your advantage. Luckily, it’s very easy to start thinking and planning smarter. Perhaps you’ve started a new job and want to stash some away some cash for your first investment, or maybe you’re completely lost when it comes to savings and checking accounts and need to start from square one.
When it comes down to it, financial literacy is simply understanding how to make smart decisions when it comes to your money.
Pretty simple right? So stop biting your nails and tell those butterflies in your stomach to settle. Money doesn’t have to be intimidating. In fact, it’s not only possible to save money while you’re young, but it’s actually one of the best times to do so. While you may not make as much money as you will years from now, you also don’t have as many financial responsibilities at this time – bills for things like insurance, a mortgage, car payments, and utilities. This makes for the perfect time to kick off your journey to financial independence – and it all starts with forming good habits around saving money.
To help you get started, we broke down some of the best pro-tips from Financial Adviser and School Teacher Cole Kelly, from his album How to Save Money When You’re Young and Broke in the Penny app.
First things first, you must prioritize saving your money. This simply means putting your money toward savings first when you get your paycheck, then using the rest for living expenses. If you wait to pay yourself until after your bills and expenses are taken care of, you risk not being able to hit your big picture financial goals or even forgetting to transfer that money at all. Take a good look at what you can afford to transfer into savings per month and start simple! It may look like $10 per month at first, but as you get better at meeting that goal it too will grow.
You may be at a stage in your life where you can afford to have some flexibility in what you’re financially responsible for. This is a great jumping off point for setting manageable goals and organizing a less complicated budget. Start by setting goals based around your lifestyle, needs, and future plans. This can be as simple as:
“I want to put $50 away from every paycheck into my savings,” OR
“I want to cut back on eating out, to once a week.”
Once you’ve set those goals, find a great budgeting tool that can help you organize and manage your money. Apps like Mint, Acorns, or Stash can help you set budgets and stick to them. This is an easy way to see how you’re doing and get more familiar with your finances.
Understanding the time value of money will be your best asset in your savings journey. As you work towards your savings goal remember to be patient with yourself – you’re learning as you go, and everyone has to start somewhere!
For more great savings tips, head to the Savings category in the Penny App for albums like The Best Savings Accounts of 2020 and Tips for Avoiding Insane Tuition Fees.
It’s important to start your financial journey early because the earlier you start, the easier it’ll be to accomplish your goals. You’ll be happy you did.