Saving In Your 20s: Why You Should Start Now
There are so many other things you could do with your money than worry about saving in your 20s. This is your first opportunity to get out on your own and live life the way you want to. Why not enjoy it? Why keep living like a broke college student when you can finally afford to skip the instant ramen and try all the best restaurants in town?
It's easy to fall into this mindset — and almost impossible to get out of once you start. Unfortunately, it's not a good path to go down if you want to grow your savings and achieve some big financial goals down the road.
Saving in your 20s is important because life only gets more complicated from here. If you can build the habit now, saving won't feel like such a "chore" down the road when you want to make some really big investments in your life, like getting married, starting a business or buying a home.
If You Earn Money, Save Money!
It's never too early to start saving (and even investing). In fact, if you have a paycheck, that's a great opportunity for you to start the process of putting some money aside for future goals.
But why bother saving when you could spend instead? Here are a few of the many reasons:
- Your expenses will continue to go up. Life tends to get more expensive as we get older because we take on more responsibility in our 30s and 40s. Saving now can give you a head start. Even if you need to scale back to make room for things like cross-country moves to further your career or even when thinking about adding to your family.
- You'll enjoy more in your 30s and beyond. Setting aside some money in your 20s can allow you to do so much later in life. That could mean saving up for a vacation, renovations for your house or even helping fund your children's education. It adds greater flexibility to make the choices you really want to make, instead of having your actions always dictated by the need to earn a paycheck.
- Lifestyle inflation, or lifestyle creep, is hard to reverse. Many people find that the more they earn, the more they spend. As a result, they find it difficult to make progress toward their goals and may constantly feel like they don't have enough money, even when they earn much more than when they started their careers.
Saving in your 20s is critical when you think about the future. Sure it might be fun now to splurge at your favorite stores and eat dinner out as often as you can — but if you want something more for your life in your 30s, 40s and beyond, you should really start thinking about saving now.
How to Start Saving in Your 20s
Ready to get started and set yourself up for financial success? It's easy to begin. First, open a savings account. There are lots of different choices, but dynamic accounts like the Key Active Saver aren't just a place for you to store your money. They come with tools that can help you better understand and improve your money habits and interest rate potential.
Then, look at your current cash flow — the money coming in and the money going out each month. Make sure to track your spending using KeyBank's Financial Wellness Tool to know exactly where your money goes.
If you spend as much as you earn each month, take a hard look at your transactions and see where you can make some improvements and free up a little more cash. Then, set up an automatic transfer from your checking to your new savings account for that amount each month.
If you already have some wiggle room in your cash flow, start using that available money to fund your financial priorities. Some good ideas for savings goals include creating an emergency fund, saving for travel, building up a down payment for a house or setting aside cash that can fund a business idea. Whatever things you may want down the line, start saving today. You — and more importantly, your future self — won't regret it.