Saving money in your 20s can be difficult, especially if you live on your own. Living on your own means that there is no one to dictate how you can and can’t use your money. However, the early you start saving money, the better it is for your future. So without further ado, let’s dive into this blog and learn about our useful tips for saving money.
1. Pay off your debts (if you have any)
Before you start saving, you’ll need to pay off your debts. Because interest accumulates over time, the longer you wait to pay off a debt, the more it will increase. So pay off your debts first before focusing on your other savings goals.
To do this, consider adopting the 50/30/20 rule. Created by U.S. Senator Elizabeth Warren when she was a bankruptcy expert at Harvard, the 50/30/20 rule is a simple way to manage your budget and pay down debt. It works as follows:
Use 50% of your income for your needs, fixed costs such as rent and utilities. Use 30% of your income for your wants, i.e., variable costs such as restaurants and subscriptions. Use 20% of your income for savings. If you earn $2500 per month after taxes, you can put aside $500. You will have paid off $6,000 of debt in just one year.
2. Use the envelope management system
Another option to help you save money quickly is to use Dave Ramsey’s envelope management system. This system involves taking your monthly cash income out of the bank (yes, all of it) at the beginning of each month and dividing it into different envelopes based on your management goals.
This way, you’ll have envelopes for your fixed costs (e.g., rent, utilities) and for your variable costs (e.g., clothing purchases, eating out, shopping). By paying for everything in cash, it’s virtually impossible to break your budget! But granted, it’s probably not the most practical thing to do in 2022!
3. Set one no-spend day per month
To get in the habit of saving money, decide on one day a month when you spend absolutely nothing except fixed costs. This can be done by preparing all your meals from ingredients at home, choosing to socialize at the park or home, and spending a relaxing evening reading or watching television.
Once you get used to it, you can do this two days a month and maybe even one day a week to increase the money you save each month. Our best tip is to have a fun day or weekend without leaving your home/apartment and binge your favorite or new shows.
4. Reduce your grocery spending
One of the best ways is to plan all your meals. This means that you can calculate exactly how much you’re going to spend before you shop and reduce your chances of going over budget. If you can cut back on your grocery spending each week, you’ll be amazed at how much you can save in a few months.
Another tip would be to consider not eating meat once a week. Meat is generally more expensive than vegetables and vegetable products, so it may be worthwhile to go without meat one day a week. These small weekly savings will add up over time.
In addition to this, look at the products sold at the bottom of the shelves. Supermarkets often put their most expensive products at eye level to encourage you to spend more, and the cheaper products are closer to the floor, making them harder to spot.
5. Cancel your unused subscriptions
Subscriptions are incredibly lucrative for many businesses because once customers have signed up for their service, they are less likely to cancel their subscription, even if they rarely use it. This is largely due to the sunk-cost bias. If applied to a subscription, the sunk cost bias means it is difficult to cancel a rarely used subscription because you have already invested so much money.
Thus, to cancel the subscription would be to accept that the money spent so far has been wasted. Postponing the subscription cancellation maintains the illusion that the subscription can still be used. In general, very few of us use our subscriptions completely. That’s why it’s better to cancel unused subscriptions now than to hold on to them in case you use them later.
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