Yahoo Finance The Best Way To Save Money at Every Age
Saving money has been difficult for many Americans lately due to a combination of factors. Inflation, soaring rates and now, the added financial burden that represents the resumption of student loan payments — which will put a further dent in Americans’ budgets — have all been taking a toll on consumers’ wallets and ability to set aside some funds.
Learn More: Money Expert Rachel Cruze Shares 8 Tips To Save Money Every Month
Find Out: How To Get Cash Back on Your Everyday Purchases
Indeed, a new GOBankingRates survey found that Americans’ biggest roadblock or challenge in trying to save money is that they don’t make enough money, with 38%. And what’s more, this sentiment is shared across generations.
While the 45-to-54 age group takes the lion’s share in feeling that way, with 43.7%, other generations feel the pinch as well. Indeed, the group is followed by the 55-to 64 age group, with 43%. The 25-to-34 age group follows, with 38%; followed by the 35-to-44 age group, with 37.7%; the 65 and over group with 34.5%; and the 18-to-24 group, with 31.8%.
Yet, while Americans recognize the road to savings is arduous, they still have lofty goals for saving in the next year. Indeed, the survey found that 17% hope to save between $2,501 and $5,000, while 15% hope to save between $5,001 and $10,000, and 9.5% hope to save more $20,000.
To help you get there, experts shared some tips about the best ways to save at any age.
Make a Budget
The GOBankingRates survey found that 54% of Americans said that budgeting is the primary way they use to save money, which, according to Austin Kilgore, an analyst with the Achieve Center for Consumer Insights, is “a great start.”
He continued, “Actually, making a budget is a great accomplishment, but often, it’s the easy part. Sticking to it is the real challenge.”
According to Kilgore, consistency from week-to-week is more important than perfection, and to do this, he said to treat your budget as a tool for reaching your financial priorities and life goals, rather than as a restrictive burden on your life.
“People who are struggling to make ends meet may need to set smaller goals, both in duration and dollar amount, to get moving in the right direction,” he said.
“A goal of saving to buy a house, for example, could be so overwhelming to someone on a limited income that they give up saving altogether. Saving to help a child’s education or purchase a new appliance, though, may help them move forward.”
Important: 11 Bills You Should Never Put on Autopay
Put Savings on Autopilot
The basic principles of saving are about the same for every age group, said Kilgore, with some caveats in certain instances.
To put your savings on autopilot, set up automatic withdrawal from your checking account to a savings account, then set a specific amount to transfer weekly or monthly, and in your budget, record this as a bill every month.
Why is that worth doing? As Kilgore explained, saving is hard even with the best of intentions.
“There will always be another unexpected expense, another bill to pay, another fun thing to do or buy,” he said. “Saving before you ever get the chance to make those decisions means it will happen.”
He added that younger adults such as some Gen Zers may prefer to be “non-banked” and shy away from traditional banking accounts.
“Automating savings is one excellent reason to have a checking and savings account,” he said.
And the GOBankingRates survey found that 17% of Americans use automatic transfers or deposits as their primary method to save money, with the 45-to-54 cohort leading the way, with 21.5%.
“Kudos to the 17% who have set their savings on autopilot,” said JL Collins, author of, “Pathfinders: Extraordinary Stories of People Like You On The Quest For Financial Independence — And How To Join Them.”
“This is the right approach and, when the time comes, it is also the way to invest.”
According to Collins, in doing so, these people are making savings a priority, paying themselves first and avoiding the temptation to skip making the deposit.
As for the 12% who chose to shop at thrift or discount stores as a method to save money, Collins said that they “are falling prey to a dangerous illusion.”
“Shopping at thrift or discount stores is exactly that: shopping,” he said. “Just like buying things on sale or with coupons is exactly that: buying things. When you need to spend money, these are fine options. But never forget you are still spending money, not saving it.”
Stick to the Budget
According to Kilgore, once you have a budget in place, get into the habit of checking it at least monthly.
“Younger generations sometimes think they ‘don’t make enough’ to have a budget,” Kilgore said.
“Those in their prime wage-earning years, like Millennials, may think they don’t have time; Baby Boomers sometimes think they won’t need a budget as they get close to (or are in) retirement. Yet budgeting is the way to know where you stand financially and the very best way to achieve your financial and life goals.”
For younger adults who might prefer a budgeting app, he noted that there are many that are free, just make sure you choose one that lets you connect all financial accounts for a unified view of your finances, predicts how much money left over you are expected to have each month, and automatically tracks past and current spending.
Leave the Credit Card in Your Wallet
While credit cards have many advantages, such as convenience and building credit profiles, try to not over-rely on them.
“Many studies have shown that you’ll spend as much as 15-20% less if you pay with cash,” said Kilgore.
Indeed, paying with cash means you’re more likely to not buy something and stick to your budget, as well as find ways to stretch your dollar, like shopping around and looking for sales, according to a Ramsey Solutions article.
“Watching those $20 bills leave your wallet or envelope system makes you actually think about what you’re spending–instead of just mindlessly swiping your credit card,” the article noted.
Advice for Specific Age Groups
18-24 years old
At this age, most individuals are just starting their careers or continuing their studies and may not have much work experience or a stable income.
Natalie Warb, financial expert at CouponBirds, said that in addition to putting a budget in place, key priorities for this age group include understanding personal financial planning and establishing healthy spending habits, such as setting up automatic transfers or deposits to save consistently.
She also recommended using accounting software to track daily expenses and develop financial awareness and exploring personal shopping and money-saving tools.
Another tip to build savings over time, is by participating in challenges such as the 52-week challenge, she said, something that 22.5% of Americans in this age group is doing, according to the survey.
25-34 years old
People in this age range typically have established careers and are experiencing gradual income growth.
They also may have added financial responsibilities such as buying a home, starting a family, or saving for their children’s education, said Warb. Therefore, stricter budgeting and savings plans are necessary.
In turn, she recommended a few steps, such as increasing automatic deposit amounts as income increases to boost savings.
In addition, prioritizing your budget and identifying areas where spending can be reduced is also key as is evaluating household purchases, considering needs and exploring membership benefits.
Finally, she said to start planning for your children’s education by opening education savings accounts such as Coverdell ESA or a 529 plan, and try to expand financial knowledge and skills.
36-45 years old
Individuals in this age group usually have stable careers and higher incomes, yet at the same time, they may also have higher household expenses and debts, such as mortgages or education loans.
“It’s important to focus on debt management and long-term financial planning to achieve retirement goals and other important milestones,” she said.
These steps include prioritizing paying off high-interest debts to save on interest payments, increasing contributions to retirement savings plans such as a 401(k) or IRA, taking advantage of employer matching programs when available.
In addition, she advised to secure adequate insurance coverage, including life insurance and medical insurance, to protect finances during emergencies.
46-55 years old
During this age range, individuals are often in the prime of their careers and may be considering retirement plans.
“It’s crucial to focus on retirement savings and assess lifestyle and spending habits to ensure long-term financial stability,” said Warb.
In turn, she said to take advantage of additional retirement account contribution limits available after age 50 and to explore opportunities to develop side businesses or income streams.
56 years old and over
For this cohort, Warb recommended considering retirement age options based on personal circumstances, as it can impact social security benefits.
“Avoid impulsive purchases and practice financial caution,” she said, adding that you should also aim to stay informed about new financial frauds and embrace emerging financial technologies.
Baby Boomers
According to Kilgore, if you are paying premiums on a large life insurance policy, but no longer are supporting dependents, judge whether you should redirect those payments to another source and adjust the budget accordingly.
More From GOBankingRates
This article originally appeared on GOBankingRates.com: The Best Way To Save Money at Every Age
