When we’re younger, we’re always told by adults that we need to start saving our hard-earned pennies. Of course, we definitely don’t listen – after all, life is for living, isn’t it?! However, as we get older, we realize we probably should have taken that sage advice after all. Here are just some of the many reasons you should start saving in your twenties.
When you’re in your twenties, there is a good chance you have fewer responsibilities than you will when you’re older. Of course, this is a generalization and not always the case, but very few people in their twenties have significant financial responsibilities yet. No mortgage, no children, and sometimes very few bills if you’re still living at home. Now is the best time to save, when you actually have some disposable income. As you get older, and those responsibilities mount up, you’ll find it a lot harder to put money aside each month.
It all adds up
While you may not be earning as much in your twenties as you hopefully will be later on in life, even putting a little bit aside can add up. Those few dollars here and there in a savings account will all make a big difference later on in life. You should follow the 50-30-20 rule throughout your life so that you’re always putting something aside. This means that 50% of your income should go on essentials, 30% on the things you want (non-essentials and luxuries), and then 20% on savings. As your salary increases, that 20% will add up more and more.
Retirement is just around the corner
It may be weird to think about your retirement in your twenties, but it will sneak up on you quicker than you think. One minute you’ll be living the mid-20s dream and the next you’ll be saying goodbye to all of your work friends as you retire. They say that life seems to speed up as you get older, so don’t put everything off until tomorrow. Using the 50-30-20 rule means you’ll be able to keep saving for that looming retirement.
How to save in your twenties
Now we know why you should start saving in your twenties, let’s look at how you can actually do it! We already know what percentage should be going into savings, but what if you can’t afford that? Unfortunately, it may be time to look at the 50% and 30% of your income. Are there any bills you can cut down? Are you spending more than 30% on luxury items? Perhaps those nights on the town and restaurant dinners are eating into your savings cash!
Make use of apps
Nowadays, we can rely on technology to help us save – thankfully! There are plenty of apps out there that will round up transactions from your bank account or help you save a little bit of money each week. Find the right one for you and let those cents add up to dollars, and finally into a retirement fund fit for a king or queen. Or at least enough to live on!
Thinking about saving in your twenties may seem daunting, but there are plenty of reasons you need to consider it. Follow our top tips to help make saving a breeze, too. If you can’t commit to 20% of your income straight away, keep building it up until you can do. You’ll get there eventually – and your future self will thank you for it.