Dear 20 Something, Are You Saving Money The Right Way?

saving money

With youth comes hope and eagerness to conquer the real world. The not-so-young anymore know about this.

When you are fresh out of college, you feel that there is so much for you out there. The world is your oyster — you just have to pry it open, with your big dreams and aggressiveness, and belief that you can make it.

While positivity like this is great, some of our younger generations become too confident and shortsighted by the possibilities ahead.

In a recent research conducted by financial planning website LearnVest, they found out that twenty-somethings are the most confident bunch among the surveyed age groups. They are the ones who are saving money for major life expenses.

According to LearnVest, the confidence of the young ones stems from the fact that they have no financial burdens compared to individuals in their 30s and 40s. No babies to feed. No kids to send to school. No mortgages.

Except for those taking care of their elderly parents, young professionals only have themselves to look after. This makes saving money easier for them.

But are twenty-somethings prioritizing saving for the right stuff?

According to LearnVest, they prioritize things like travel, buying a house, going back to school, and even starting their own company, as opposed to saving for more practical things like emergency savings account and starting a retirement account, or paying off student loan debts.

Travel - travel is fun, no doubt, but admit it, it’s an expense. Depending on the destination or travel itinerary, it may require you to shell out money you could have saved for emergency which, as we teach here at Financial Rescue, is a must for everyone.

Housebuying a home is no small thing yet a lot of young people rush into owning a home they can call their own, even if it will sap their savings away and choke their cash flow for years. Yuppies who are saving for this major expense might want to think it over again and consider renting for a while.

Going back to school – this is a good investment in your own value in the job market but some yuppies rush into it, topping up their student loan debts, without an income and savings. It might be better to get a job first, have some income flowing and start paying off student loans before racking off another one.

Starting a company – it’s everyone’s dream to make it big in business especially in Silicon Valley, just like the tech greats like Mark Zuckerberg, Steve Jobs, Bill Gates, etc.

We don’t want to kill off the young people’s dreams but for some, it may make more sense to put this off and iron out their financial lives first before making bets in startups. At least, you’ll have some safety net in case the going gets tough.

Youth is a huge advantage as it gives you enough time to start building a healthy financial life. “Healthy,” however would require making the right priorities, and making plans, instead of wandering all over, making costly mistakes in the process.