Savings Strategies for Young Adults Who Feel Behind

3 MIN. READ

Key takeaways:

Feeling like you’re behind on your savings isn’t uncommon for young adults.
There are strategies you can use to catch up, such as automated transfers or an extra source of income.
We share some of the best tips and tricks to grow your savings and get closer to your goals.

Do you feel that you’re struggling with your savings goals? You’re not alone. Plenty of young adults report that growing their savings isn’t easy.

The good news is that it’s never too late to adopt a new savings strategy. We’re here to share a few savings strategies for young adults to help you get back on track.

Pay Yourself First

If you’re not doing so already, take advantage of automated transfers to put aside a portion of your paycheck into a savings account as soon as you get paid.

That way, you’re making saving a priority rather than saving what’s left after your monthly expenses.

Build a Small Emergency Fund First

Your long-term savings goals matter, but you need a small emergency fund first. Saving $1,000 or even $500 means you can comfortably cover unexpected bills without getting into debt or dipping into your main savings fund.

Organize Your Savings in Buckets

Earmarking your savings into different funds has several benefits:

You can clearly separate short-term and long-term goals.
It’s possible to allocate money toward a specific goal rather than adding it to a main savings fund.

This strategy allows you to prioritize saving for the goals you care most about, like a new car or homeownership.

You can contribute to these savings buckets as soon as you get paid, and allocate money to other buckets (like your vacation fund) when you have some extra cash.

Put Any Extra Money Aside

When you get some money you weren’t expecting, it’s tempting to spend it on something fun. Instead, make a rule that it has to go into your savings (or at least 50% of it).

This rule can apply to:

Tax refunds
Bonuses from work
Monetary gifts from relatives

You’d be surprised at how quickly these small contributions to your savings can add up.

Small Lifestyle Changes

It’s fine to keep spending on your wants, but a few simple lifestyle changes can help you save more. We’re talking about choosing free activities when you hang out with your friends or cooking at home instead of going out.

Keep track of how much you’re saving with these small changes every week, and transfer this amount to your savings account.

Budgeting and Tackling Debt

If saving still feels challenging, it’s time to take a closer look at your budget and debt level. You might have a hard time saving because you’re living beyond your means or have a lot of debt.

Depending on your unique situation, it might be best to focus on getting out of debt or making some big lifestyle changes (like moving to a more affordable place) to free up money for your savings.

Extra Income

There is only so much money left after covering your monthly expenses. If you’re behind on your savings goals, it might be a sign that you should look into earning an additional income.

We’re not talking about taking on a second job, but there are ways to supplement your income:

You can look into freelancing and side gigs.
You can also invest in training or take free online classes to access higher-paying career options.

If you can generate an extra income, try saving at least 50% of what you make on top of your main salary.

Use the Right Banking Products

Your savings can grow faster with the right savings account. You should look for low fees, a good interest rate, and features that help you manage your savings, like automated transfers from your main checking account or digital banking to easily check your balance.

At Power Financial Credit Union, we offer savings accounts with competitive dividends and no monthly fees. You can start with as little as $5, and we even offer up to a $250 welcome gift if you meet certain conditions to help you kick-start your savings.

Contact us online to learn more about saving with Power Financial Credit Union or visit one of our South Florida branches.

FAQs

How much should I save if I’m just getting started?

Start with an amount that feels manageable, even if it’s $30 or $40 per paycheck. Once that feels comfortable, you can slowly increase it over time or as your income rises.

Do I need an emergency fund?

A small emergency fund helps you handle surprise expenses, like car repairs or medical bills, without going into debt. Once you’ve built a basic cushion (for example, $500 to $1,000), it becomes easier to keep saving for longer-term goals.

What are “savings buckets,” and how do they help?

Savings buckets are separate savings goals, like “Emergency Fund,” “New Car,” or “First Apartment.” Organizing your money into buckets makes it easier to stay motivated and helps you see exactly how close you are to each goal.