Saving Strategies – Each of us wants to save more money, but we must have a plan.
Moreover, the best way of saving strategies depends on the stage of your life, because each stage has its own unique financial commitment. Although the circumstances vary, these generation-specific recommendations will point you in the right direction.
Millennials (19-35)
Financial reporter Vera Gibbons said that millennials born between 1980 and 1996 are actually better than Generation X in terms of money management. However, they tend to live in the moment and prefer immediate gratification to long-term financial planning. Moreover, because personal finance is not a core curriculum of the school, they may not know much about how to manage finances. Try these strategies.
- each payday, set aside money to “pay yourself first” and use it for an emergency fund
- learn fine art of delaying gratification so you have the self control to say no to yourself
- avoid paying rent, which can cost up to 30% of your income, by living at home
- pay off student debt with an income-based loan repayment plan
- use a budgeting tool so you know where your money is going
- give yourself a weekly allowance to keep discretionary spending in check
- make small, manageable reductions to your expenses which leaves more for savings
- contribute to your employer’s retirement plan
- manage your credit score as it affects your ability to obtain mortgage or other financing
Gen Xers (36-50)
For the Xers generation born between 1965 and 1979, it takes less time to build retirement savings, so they must make regular contributions to their retirement savings during these peak income periods. Managing cash flow at this stage is particularly challenging. Consider these options.
- avoid buying more home than you can afford
- using cash will make you think harder before letting it go
- pay yourself first
- entertain at home rather than going out
- overestimate expenses and make small, manageable spending reductions
- contribute to your employer’s retirement plan
Also Read: 6 Things To Do Before Settling Into Your New Home
Baby Boomers (51-69)
Most baby boomers were born between 1946 and 1964, and their financial status is better than younger baby boomers, but only 60% report retirement savings, while 93% provide financial support for their adult children. As a result, they face a dangerous combination of insufficient preservation and long life. Here are some ideas to protect your future.
- delay retirement or return to work to generate income
- explore the downsizing option and/or ways to leverage home equity
- accelerate retirement savings and allocate investments properly
- consider long-term care insurance
- reduce expenditures and eliminate high cost items like transportation
- plan to retire in, or move to, an area with lower expenses
- adjust your standard of living
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