How to Save More Money Than Your Parents Ever Did
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There comes a time in anyone’s life when making it to the end of the month without debt isn’t enough. As an adult, you want to cross a psychological barrier. You want to save more money than your parents ever did.
Financial independence is the goal everyone chases in one way or another. Having low or no debt, a consistent income, and some cash in a savings account gives you a feeling of freedom. If you don’t have to figure out a way to survive until the next paycheck, you’ll have more energy to focus on your life, be more productive at work and meet personal obligations.
Times have changed. You deal with new challenges — things that your parents never had to worry about. Tuition costs have been continuously growing, which means you’re in debt before you even get to have your first adult job. You struggle to pay off your loan just to have a good enough credit score to afford a mortgage. Which is more years of debt and interest rates to pay.
In this context, is it still possible to save more than your parents did 30 years ago? The answer is yes! Let’s take a look at some of your options.
Build a Web of Alternative Income Sources
The digital era has brought possibilities your parents never dreamed of having. They had 9-to-5 jobs they were looking to keep for as long as possible, to be able to pay bills and mortgages. On the other end, you have millions of job opportunities one click away.
Freelancing (full-time or as a side source for extra income) brings $1.4 trillion into the economy every year. And 63 percent of freelancers believe that having various sources of income is better than counting on a single employer.
Most probably, quitting your job to put your efforts in the gig economy won’t bring you more money right from the start. But, if you learn to manage them both (at least at the beginning), you’re more likely to earn more than what your parents used to when they were your age.
Don’t Be Afraid of Changing Your Job
For years, people used to focus on a single job. Between loyalty and fear of the unknown, your parents’ generation rarely considered looking for job opportunities just to make more money.
It’s something hard to understand today when most of us look for better employers, higher income and more possibilities to grow inside the company. If you can make more money by changing your job, then you’re free to do it without anyone looking weird at you. It’s a chance your parents never had!
Keep Debt Low
Debt in the U.S. has reached $1 trillion. As much as $830 billion of this money is credit card debt. Here’s the thing: to save more money than your parents, you need to stop adding credit card debt to what you already owe.
This means that you must learn to do more with less:
- Shop for what you need, not what makes you look cool on Instagram.
- Cook your dinner and pack your lunch — you can save up to $7,000 a year by eating out less.
- Buy limited quantities of groceries to save more and avoid food waste.
- Look for a cheaper alternative to your current phone contract.
- Uninstall some of the shopping apps on your smartphone.
If you already do all these, but you still don’t have enough money to start a savings account, you can try student loan refinancing. This way, you can lower your interest rate and use less money each month to cover your debt — all without affecting your credit score.
Invest Small Amounts of Money
Money makes more money. Use a part of your income to make small investments. You can start investing in the stock market with as little as $100. It’s not going to make you a millionaire overnight, but you have to start somewhere.
Dedicate some time to your financial education and start putting your money in shares, bonds, funds or stock market, depending on your goals. However, investing can be tricky, so try to diversify your investments — this way, you don’t risk losing all your money in one wrong move.
You’re Never Too Young to Think About Retirement
The 401(k) Plan is the safest tool when it comes to saving money for your retirement. It may seem like an inefficient collection of mutual funds. But, it gives you plenty of advantages, such as free money from employer matching contributions. Plus, the money you save with your 401(k) is tax-free (up to $18,500 a year).
Depending on your income and your current expenses, you should try to put the maximum into your retirement account.
Start with building a budget. It helps you keep track of your expenses, which is the first step in saving more money. Then, you can make small changes in your spending habits, to make sure you make the most of every dollar you earn.
A healthy financial future includes innovative ways to make money without working extra hours, a frugal lifestyle, and smart investments. You don’t have to quit on the things you love. You have to learn how to adapt your expenses to your earnings, to use your credit card less. This way, you’ll save more than your parents ever did!
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