15 Ways for Millennials to Save Money

Your 20s and 30s seem to come with a never-ending barrage of major expenses. As a millennial who has paid for a wedding, bought a house and saved for a new car, I know how challenging it can be to manage big expenses while trying to build up your nest egg. Whether you’re planning to buy a home, take a trip, go to grad school or start a family this year, here are 15 ways you can start saving for your goals.

1. Max out your retirement contribution – If I could go back in time and share one piece of financial advice with my college-aged self, this would be it. Save as much as you can and start saving early. If your employer offers a 401(k) match, take full advantage. Think you’re too young to worry about retirement? Consider this: The difference between starting to save when you’re 20 and when you’re 30 could be hundreds of thousands of dollars when you retire, thanks to compounded interest.

2. Shop smarter – You don’t have to spend your Sundays clipping coupons, but you can save a lot by shopping for the right items at the right places. Supermarkets and discount grocers like Aldi often offer the best prices on milk, eggs and other staples. Warehouse clubs like Costco tend to have lower prices on generic and name-brand prescription drugs and vision care products. And big-box retailers like Target often have good deals on store-brand cereal and snacks. If you absolutely must have those organic, gluten-free, fairy-dust-sprinkled cookies from Whole Foods, at least try to wait for a sale.

 3. Stack discounts online – Before I hit the checkout button on an online purchase, I always check for coupon codes. You can often save an additional 10% or more or get free shipping. Sites like retailmenot.com compile discount codes from a variety of retailers. To see hot deals daily, visit slickdeals.net or download the app. Also check rewards sites like activejunky.com, which give you bonus cash back when you shop at certain online retailers.  

4. Set goals and track your progress – Online tools like mint.com from Intuit can help you organize your finances by allowing you to see all of your bank accounts, credit cards, retirement accounts, mortgages and other loans in one place. You can set savings goals and budgets and categorize expenses to see exactly where your money is going each month. Mint can also alert you if you spend more than usual in a particular category or if you have a bill coming up. Want to take a free online class that can help you create a budget and stay on track? Visit youneedabudget.com for that and more. And finally, the American Institute of Certified Public Accountants’ website FeedthePig.org is another great financial planning resource with lots of tips for millennials.

5. Ask your accountant about available tax incentives – Paying tuition?  You may qualify for an education credit. Have a new addition to your family? You may qualify for a child tax credit, dependency exemption, and/or a child care credit. There are nearly 100 federal tax credits. Your CPA can help you determine which ones apply to you.

6. Resist the urge to splurge – Sure those Michael Kors shoes may be cute and only $89.99 on sale, but do you really need another pair of black ballet flats? It’s OK to treat yourself occasionally, but keep in mind that even $5 cups of coffee add up and funnel income away from your savings goals. Think about the opportunity cost before you open your wallet. This is also true when it comes to buying gifts for others. Just because you have a good job doesn’t mean you have to buy your niece a pony (or anything from the American Girl store for that matter). Keep it within reason.

7. Pay yourself back with interest – If you hate the idea of borrowing money from the bank or from family, you might want to consider a self-financing program. You can build your savings to finance major purchases, borrow the money from yourself, and, here’s the key: pay yourself back with interest. Learn how to develop a self-financing program.

8. Don’t overpay for car insurance – If you’ve been with your current insurance company for three or more years, it’s time to call around and get new quotes. You can check rates at esurance.com.

9. Mind your credit rating. Bad credit can hurt when you want to buy a home, get a car loan or start a business. The Fair Credit Reporting Act entitles you to a free copy of your credit report from each of the three nationwide credit reporting companies once a year. Beware of imposter websites; the official site is annualcreditreport.com.

10. Opt for a Flexible Spending Account – An FSA allows you to set aside money for medical or dependent care expenses. The money is deducted from your paycheck before taxes, so your dollars go further. If your employer offers this option, don’t ignore it.

11. Eliminate debt – Pay off your credit cards, student loans, car payments and any other debt as quickly as possible to minimize the amount you will pay in interest. If you have $5,000 in credit card debt with an annual percentage rate of 18.9%, and you pay only the minimum balance of $200 each month, it will take you almost 12 years to pay off that debt! Bankrate.com has lots of handy calculators, like this one, to calculate your credit card debt payoff. One more tip: If you have a mortgage, make one extra payment a year toward the principal; you’ll pay off your mortgage faster and save thousands.

12. Establish an emergency fund – Set aside enough to cover at least six months of living expenses in case you or your spouse loses a job or has unexpected medical expenses.

13. Bring your lunch – Even if you only buy lunch from the Subway next to your office, spending $5 a day, five days a week adds up to $100-$125 a month. Brown-bagging it could save you hundreds of dollars a year.

14. Don’t party like it’s 1999 – Alcohol is expensive, especially if you’re buying drinks at a South Beach hotel bar on a Saturday night. Head to happy hour instead to cut your bar tab in half (two-for-one specials!), or better yet, host your own get-together at home. Don’t let the thumping bass, dim lights and hot bartenders fool you into believing that bottle of Grey Goose is actually worth $350 when you could pick it up for under $50 in the store.  

15. Spend less than you earn – It may seem obvious, but many people struggle with this simple concept. Remember, it’s much easier to be comfortable with less than it is to scale back once you’ve gotten ahead of yourself. In the end, it’s all a numbers game (and not just because I work at an accounting firm). Just like you’ll gain weight if you consume more calories than you burn, you’ll eventually go broke if you spend more money than you earn.