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4 Millennial Money Saving Tips
Saving money doesn’t have to be a chore. What would you do with that extra cash?
Saving more money is the #1 financial goal in 2023 according to our survey of over 400 millennials.¹ Is it #1 on your list too?
Most money saving advice you see focuses on removing spending from your life, like reducing online shopping or postponing those kitchen renovations. Spending less is an obvious solution... but it’s not always practical.
It’s hard to enjoy your life when you feel like you can’t spend money on the things you enjoy. We believe you can save and treat yourself from time-to-time – it just takes balance.
Key Takeaways
Saving doesn’t have to mean sacrificing things that bring you joy.
Mind your rates. Pay attention to how much interest you’re earning on savings, as well as how much you’re paying on things like credit cards and insurance.
You’re only as strong as your plan. Set yourself up for success by planning upfront.
Tips to Save Money Like a Jenius
Ever heard the phrase “the journey of a thousand miles begins with one step”? The same is true when saving. Check out these five tips to help you save money fast without sacrificing things that make you — and your bank account — happy.
1. Say Goodbye to High-Interest Debt
Do you really know how much you’re paying in interest on your credit cards? You might be surprised to learn that the average credit card interest rate is a whopping 20.4%.² That’s why paying off high-interest credit cards should be top of your list if you’re trying to save.
To consolidate debt, you could investigate a low-rate personal loan or credit card balance transfer. Check out the example below to see how a personal loan could help you manage the cost of interest. Interest rates on personal loans and credit cards are often expressed as an annual percentage rate (APR), which is the yearly interest charged on a balance.
Let’s say you have a $15,000 balance and plan to pay it off over three years.
For a traditional credit card with a 16.99% APR, you’ll pay $4,249 in interest. With a personal loan at 10.00% APR, you’d pay $2,424 in interest. In this example, switching to a personal loan with a lower interest rate could save you $1,825. Remember these interest numbers assume taking three years to pay off the balance and making regular monthly payments. The amounts may be less if you pay it off sooner.
Traditional Credit Card | Personal Loan |
|---|---|
16.99% APR | 10.00% APR |
$4,249 pain in interest³ | $2,424 paid in interest⁴ |
If you do choose to transfer balances to low or 0% interest credit cards, be sure to watch for transfer fees and deferred interest.
2. Make Interest Work for You
High interest rates aren’t always bad news. In fact, you can make higher rates work for you. When the Fed raises interest rates, many banks pass on the benefit to consumers with higher rates on deposit accounts. Switching to high-yield savings accounts could help your money grow even faster as it sits in your account.
A high-yield savings account can earn interest as much as 20 to 25 times higher than a traditional account.⁵ The national average Annual Percentage Yield, for a traditional account is 0.24% APY, whereas a high-yield account might have a rate as high as 3.30% APY.
APY refers to the yearly interest a balance earns including compounding interest. Say you put $10,000 into a savings account for one year, the interest made on this deposit will grow based on the APY of the account.
Traditional Account | High-Yield Account |
|---|---|
0.24% APY | 3.30% APR |
$24 (Or about 5 Starbucks lattes) | $330 (That's about the price of a new standing desk for your home office) |
*Note, these are example rates for illustration purposes only.
With the high-yield option, you would earn a total of $330 in interest compared to just $24 from a traditional account. (Quick reminder – interest earned on savings may be taxable, so your total earnings will probably be a bit lower after the IRS takes their cut.)
When looking for a high-yield savings account, consider a digital bank. Banks that operate totally online can cut operating costs by not having physical locations. In turn, they usually offer a higher rate on savings. Just make sure the bank has FDIC insurance to protect your eligible accounts (typically up to $250,000 per depositor), per FDIC-insured bank, per ownership category.⁶
3. Work Smarter, Not Harder with Auto-debits
Sometimes having extra money sitting in your checking account makes it easier to spend on things that are more want than need. But, if you automatically set aside money in a savings account each month, you’re both paying yourself first and making progress toward your goals without even thinking about it.
You can usually set up automatic transfers through your bank. Most jobs also give you the option to split your paycheck between multiple accounts, allowing you to contribute to your savings every pay cycle.
If you follow the 50/30/20 rule of budgeting, 20% of your paycheck can go straight into your savings account each pay period. You may choose to put some of this 20% into your retirement savings.
Say you take home $7,000 each month. $1,400 of that would automatically transfer to savings. Over the course of a year, that’s $16,400 toward your goals before factoring in potential interest earned.
4. Clear Out the Cobwebs (aka Recurring Payments)
It’s time to tidy up ... your subscriptions. Remember that free trial you signed up for to stream the latest show? Did you remember to cancel the charge after you finished the season?
A 2022 study from C+R Research found that a whopping 42% of consumers forgot they’re still paying for a subscription they no longer use.⁷
Not only do people forget about subscriptions they have, but they usually underestimate what they spend each month on subscription services. Most people surveyed estimated they spent around $86 per month.In reality, the average monthly spend was $219, that’s 2.5 times more than what they thought.⁷
It’s also always a good idea to periodically check in on larger recurring payments like insurance. Did you recently install a home security system? Do you have a clean driving record? These things could help lower your premiums and help you save on insurance.
If you just bought your first home, you could consider bundling your home and auto insurance. Make sure you don’t let your coverage lapse if you bundle policies or change companies though.
Final Thoughts
There are lots of little habits you can add to your routine that may help you save money in the long run, without sacrificing the things you enjoy. Make a savings plan so you’re 100% clear on what needs to be done, and when, to reach your goals.