Tips to developing financial saving strategies to help you now and for retirement.
Jul. 22, 2015 Whitepaper

Educating the Next Generation: Saving Strategies for Young Adults

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For many young professionals just starting out, saving can be a challenge. However, saving while you’re young can make a big impact on your life in the future. Even saving a small amount today can go a long way toward paying off student loans, buying a car or purchasing your first home in the future. 

The key to saving is starting early. Many different types of savings accounts pay interest on your deposits. With the benefit of compound interest, such accounts have the potential for significant growth. 

When planning for your financial future, consider the following:

  • It’s never too early to start saving for retirement – If your employer offers a 401(k) plan, now is the time to start contributing. Not only will you benefit from your own contributions, but many companies also provide an employer match that can increase your account’s value even more.
  • Another way to save for retirement, particularly if you are not eligible to participate in a 401(k) plan, is to divert some of your income into an individual retirement account (IRA). By making contributions directly from your paycheck, the money leaves your pocket before you are tempted to spend it, and it is able to grow on a tax deferred basis.
    • When saving for your future, it is also important to reduce your spending. The following strategies may help you save: Save the same amount that you spend on unnecessary items, such as alcohol, designer clothes, name-brand coffee, etc. If you can’t afford to match the spending with savings, don’t purchase the item. 
    • When deciding on whether or not to purchase an item, think about how much it costs in terms of hours of work. For example, if you are debating on buying a new dress that costs $75 and you make $15 an hour. Ask yourself if it is really worth five hours of work (75/15) to have the dress. This strategy may help put your spending into perspective as a portion of your income.
    • Follow the 30-day rule – Before splurging on an item, wait 30 days. If, at the end of the 30-day period, you can still justify purchasing the item, then do so. However, by waiting to purchase the item, you may realize you no longer want it. 
    • Make a list – Making a list before going to the store may help you purchase only the things you need.
    • Track your spending and stick to a budget – Tracking your spending can help you avoid overspending.  

Because small changes can make a big difference over time, the following everyday tips can help you save: 

  • Buy online and/or in bulk 
  • Make your own coffee instead of purchasing it from a retailer 
  • Eat out less, bring lunch to work 
  • Only use ATMs affiliated with your bank to avoid fees 
  • Sign up for free customer rewards programs 
  • Keep loose change 

For more ideas on how to save, contact your advisor.

Sources:
http://www.americasaves.org/for-savers/make-a-plan-how-to-save-money/54-ways-to-save-money
http://www.thesimpledollar.com/little-steps-100-great-tips-for-saving-money-for-those-just-getting-started/

This document is for informational use only. Nothing in this publication is intended to constitute legal, tax, or investment advice. There is no guarantee that any claims made will come to pass. The information contained herein has been obtained from sources believed to be reliable, but Kaiser Hoffman does not warrant the accuracy of the information. Consult a financial, tax or legal professional for specific information related to your own situation.

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