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Money Matters Blog

Tuesday, April 12, 2016

Millennials and Our Empty Savings Accounts

As millennials, we all know how hard it is to save money. Between student loans, ever-rising living costs and salaries that are most likely mediocre at best, our savings goals are apt to get shoved on the back burner as we attempt to navigate the challenges of adulthood in all their money-sucking glory. But there's a difference between not saving a lot of money and pretty much not saving any at all. Recent data confirms that almost 52 percent of millennials have less than $1,000 saved.

Now of course the term "millennial" encompasses a pretty wide age gap -- specifically, today's 20 to 35-year-olds. But while it's not so crazy for a fresh-out-of-college 22-year-old to have a pathetically low savings account balance, those of us in our late-20s to mid-30s, who conceivably have a number of working years under our belts, need to be doing better. And when it comes to saving, even younger millennials -- those 25 and under -- shouldn't be let completely off the hook. While it's true that full-time college students, for example, don't have much of a chance to save (many, in fact, technically have negative savings thanks to their student loans), a failure to amass even a tiny amount of savings points to misplaced priorities more so than missing opportunities.

Why It's Important to Save
Most financial experts agree that everyone, regardless of age or circumstance, should have an emergency fund to cover three to six months' worth of living expenses. Say you lose your job but still have bills to pay (because that's kind of the way the world works). Without an emergency fund, you may have to resort to taking on debt, which also means racking up ridiculously high interest charges along the way. Even if you're among the lucky folks (or unlucky, depending on how you look at it) who get to live with their parents rent-free, you never know when you might face an unexpected car repair, injury or other random occurrence that winds up costing you money. To not even have reached the $1,000 mark in your savings account means you're really taking chances and putting your financial future at risk.

How to Ramp Up
If you're among the many people with a miserably low savings account balance, fear not. You can find ways to save, even on an entry-level paycheck. For starters, examine your expenses and commit to three small changes that'll shave a few dollars off your bills each month. You don't need to do anything drastic, like give up your cell phone entirely, but you can, for instance, lower your data plan, do your own nails in place of a manicure or cancel Netflix and borrow books and movies from your local library for free. Finding just three separate ways to save $10 each month means that over the course of a year, you can put aside an extra $360 in total.

Additionally, be mindful of major budget-busters like dining out or ordering in. You can prepare your own meals for a fraction of what it costs to have someone else do the work for you. Eliminating just one restaurant meal each month can save you $20 -- or $240 over the course of a year. Add that to the $360 you just saved, and there's a cool $600 right off the bat.

Saving money is really all about making choices and getting our priorities straight. It's not always easy, and it's not always fun, but like it or not, we owe it to ourselves to be financially responsible -- because, at least in theory, that's what adults are supposed to do. 

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