How to save money in your 20s
New statistics show that more than half of young people in the UK have no savings
An increasing number of young people in the UK are living from one wage packet to the next without any savings to fall back on, official statistics have revealed.
Newly published research from the Office for National Statistics (ONS) reveals that 53% of 22 to 29-year-olds had no money in a savings account or an Isa in 2016. This is up from 41% in 2008.
The Daily Telegraph says that “the financial prospects for many young people in their 20s have steadily gotten worse over the last few years”, and that young people “continue to feel the sting from the financial crisis”.
If you are looking to beat the squeeze and start saving, here are a few tips:
Create a budget
A budget plan is one of the easiest ways to keep your spending under control, CNN says.
“If you really want to get your finances on the right track, map out a budget and review it every few months to make sure it’s something you can actually stick to,” the news site advises.
NerdWallet suggests budgeting “50% of your income on necessities and 30% on wants, allocating the remaining 20% to savings”.
Automate your savings
The BBC recommends that people in their 20s should automate their savings so that they don’t have to remember to put money away.
“Link your bank account to a smart app,” the site says. “The app analyses your spending habits and decides how much you can afford to save, and automatically moves the money into a savings account.”
Set up a savings account at a different bank
A similar trick is to not only set up a savings account but to do so at a different bank to the one where you have your current account.
Forbes says: “The old out of sight, out of mind trick works really well here! Putting a savings account or two at a different bank than the one which houses your main [current] account will reduce the temptation to keep pulling savings into [your current account], because you won’t see it.
“You also can’t move the cash quickly, as it generally takes about two business days for those funds to clear, so it’s harder to take a little out in a moment of weakness.”
Spend in cash
If you’re going on a night out, use cash rather than debit or credit cards.
This will create a limit on the amount you can spend. Then set aside “any change you have left, to gradually build up a pot of notes and coins”, says the BBC, which adds that if you fear temptation, you could opt to leave all cards at home.
Entertain at home more
Instead of heading out for costly drinks and dinners, entertain guests at home, whether for a night of drinking or a sophisticated dinner party.
“You’ll have plenty of time to relax at your table and won’t have to deal with a huge cheque at the end of the night,” says Forbes.
Ask for a rise
Sometimes, just asking for more money may do the trick.
“Contrary to what you may have been led to believe, raises at work aren’t always a given,” CNN says. “Sometimes, you need to fight for that raise, and the sooner you do, the more you stand to benefit.”