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Saving Strategies for Your 20s and 30s

Saving Strategies for Your 20s and 30s

Whether you are in your 20s and just getting used to adulthood, or your 30s and really settling into your home life and career, you hold a lot of power over your future. What you do today can set the groundwork for achieving your goals tomorrow.

If that seems like a lot of responsibility to shoulder, just take it a step at a time. Here’s a good place to start: We’re going to show you below how easy it can be to develop a plan for saving that will help with money management and cultivating sound financial habits that will serve you for life.

Set your savings goals

Think about what you need to save for and what you want to save for. You need to save for emergencies and retirement, for example, but you may want to save for a new car, a house, a vacation, etc. If you have children, you may also want to start saving for their education. If you’re entrepreneurial, you may want to save toward launching a business.

Whatever your goals may be, your saving strategy can include them all. Keep in mind that you will need to prioritize these goals since your available income may not allow you to save for everything all at once. (The good news is that the average American’s income doesn’t peak until they reach 45 to 54 years old, so you may have the opportunity to make an increasing amount of money in the coming years.)

Write your savings goals down in order of priority, beginning with contributing to a retirement fund and establishing an emergency fund, which will provide you with a cushion in case of an unexpected expense or loss of income. If your employer provides a 401(k), 403(b) or Thrift Savings plan that matches your retirement savings to a certain percentage, do your best to save at least that percentage so you can take advantage of that free money. For the emergency fund, aim to save enough to cover at least three to six months’ worth of your living expenses. This Dollar Bank Rainy Day Calculator can help you estimate that figure.

Get your budget right

If you haven’t created a monthly budget yet, do it now. Having visibility into your finances at any moment in time empowers you to manage your spending and saving wisely. Your budget will show you how much money is coming in each month and how much is going out. And while your rent or mortgage, insurance and car payments may be fixed, you can work to cut down on some other expenses — namely, discretionary spending and utilities.

Assess what you’re spending each month on entertainment, restaurant meals, clothing, technology and other discretionary purchases. See where you can cut back, and then, allocate those dollars to your savings goals instead. For utilities, watch how much electric, gas and water you use to keep those costs as low as possible, and help protect the earth.

Be sure to incorporate your savings goals into your budget, assigning hard numbers to each goal so that you’re sure to “pay” those obligations each month just as you pay your bills. Do the math to see if saving this much will get you to your goals on your target timeline. If not, you’ll need to adjust your savings commitment, your timeline or both.

Pay down your debt

Looking at your budget will show you your monthly payments for any outstanding credit card balances, student loans or other debt you may be carrying, but dig a little deeper to find out just how much of those monthly payments is going to interest charges. Then consider this: Every dollar you pay in interest could be earning you interest if you were saving that money instead.

Take steps to accelerate paying down your debt to free up more of your money for savings. Strive to pay more than the minimum payment each month, and learn about the debt avalanche and snowball methods; you may find one of them to be helpful as you work toward minimizing your high-interest debt.

Save a little extra along the way

When you find yourself with some extra discretionary cash — maybe you’ve earned a bonus or raise, or received a cash gift, tax refund or some other windfall — consider depositing at least some of it into one or more of your savings accounts. Every little boost you give your savings is a gift to yourself!

Make saving easier on yourself

Sticking with your saving strategy doesn’t have to be hard. Taking these steps can help:

Harness the power of interest. Choose from a variety of interest-bearing savings accounts and certificates of deposit (CDs) that help your money grow. To make it easier to track your progress on each individual goal, you can open one account for your emergency fund, another for your home purchase plans, another for next year’s vacation and so on.

Set up automatic transfers. Automating deposits to your savings account(s) from your paycheck, or making periodic transfers from your checking account, can help you stick to your commitment to save consistently.

Stay motivated. Use digital banking tools to keep track of your savings balances. Seeing your money grow and knowing you’re moving closer and closer toward your goals can be very gratifying. Stick with your strategy and make your financial dreams come true!

Visit your local Dollar Bank office or call us at 1-800-242-2265 to talk with one of our banking experts about developing a savings plan to help you reach your financial goals.

This article is for general information purposes only and is not intended to provide legal, tax, accounting or financial advice. Any reliance on the information herein is solely and exclusively at your own risk and you are urged to do your own independent research. To the extent information herein references an outside resource or Internet site, Dollar Bank is not responsible for information, products or services obtained from outside sources and Dollar Bank will not be liable for any damages that may result from your access to outside resources. As always, please consult your own counsel, accountant, or other advisor regarding your specific situation.

Posted: June 07, 2024