Have no fear – this isn’t another blog post where a money expert rambles on for 400 words about why putting away 6% into your 401K is critical in your young professional years (though it is important).
That’s not what we as Millennials are concerned about. We want to live life to the fullest with the income that we have while magically meeting long-term financial goals.
The only problem is… it usually doesn’t work out that way.
But, it is possible to do both. We must learn to think about savings in a different light. Saving money isn’t losing your spending money, in fact, it’s quite the opposite.
Thinking about it in this way and creating a realistic savings budget will allow you to be the responsible young professional your mother always said you could be and afford you the freedom to actually do more – guilt free.
Why is that?
It’s because we are in the middle-ground between knowing what we know we should be saving – what the media, our parents, employers, financial advisers & friends tell us – and wanting to find meaning in our lives.
In other words, we are prioritizing meaningful experiences over savings. Shame on us! But would we trade those experiences for extra dollars? No way!
USA Today writes that 70% of Millennials said that being able to afford anything, like travel and treating friends and family to things, was their definition of success. It’s true. When is the last time you talked to a Millennial that didn’t mention traveling the world? It’s at the top of our priority list, that, and finding meaning in our work.
All of that said, I know the 35 year-old me will look back on my twenties and wonder why I didn’t save more when I didn’t have a family and mortgage to worry about.
So, let’s talk savings –
How much do you currently save per month? $0, under $100, over $100, over $300? Whatever the number is, the ultimate goal is to save more and still have fun!
A few steps to take for starters:
1. Determine what sorts of activities are meaningful to you. Then, figure out how much they will cost each month. If it’s a trip to Europe, you might have to sacrifice smaller trips in the meantime. Or, skip the big trip to Europe and become a weekend vacationer. Maybe your favorite thing to do is brunch on Sunday… that’s fine!
2. Create a budget and put away the maximum amount of money you can afford at the beginning of your paycheck, not the end. It’s much less tempting to spend extra cash when you don’t have it in your checking account.
The easiest way to scale back how much you spend is by simply reducing the amount of accessible money. I.e., the out of sight out of mind mentality. Try the new software Digit for auto-savings.
Doing this will give you a sense of accomplishment and will help you to feel good about spending your extra fun money.
3. After you’ve determined how much bills and savings are each month, you’ll want to leave a little extra so that you can still enjoy a cup of coffee. This may mean cutting back on other things in life that eat away at our paychecks. Eating at home instead of going out, for example, can save you thousands of dollars and it tends to be healthier!
It all goes back to step 1 – what makes your life meaningful?
Figure that out and develop a budget around it that includes maximizing your savings. For me, it’s traveling on the weekends and paying off my student loans. This means I often sacrifice those new shoes or a sushi dinner with friends, but I’m OK with that because I’m doing what I love to do.
The absolute best part is that after a few months, you’ll start to realize that you never needed the extra money in the first place.
Your savings will start to grow and before you know it, you’ll have $20K in the bank – talk about a meaningful experience!
Remember, you’re not losing money by putting it in savings. What you’re doing is creating a safety net for the unexpected events in life and a pile of cash for the big-ticket (meaningful) moments.
Cheers to savings!