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Written by Ryan Scribner on June 14, 2020
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41 Essential Tips To Save More Money In Your 20's

Guest post from Ryan Reeves of Investing City.

Let’s face it. Saving money sucks. It’s not fun, it’s not cool, and it’s not easy. No one likes a cheap-skate right?

Regardless, saving money is important. It enables us to live the life we dream of and achieve the freedom we so desire.

But first, a story.

Delaying Gratification

Nearly 60 years ago, Walter Mischel and his team of Stanford psychologists, performed one of the most popular studies ever.

Here’s how it went.

Mischel tested hundreds of young children. The kids were told that they could either eat a marshmallow now or wait 15 minutes to receive two marshmallows. Then, the researcher would leave the fluffy dessert on the table and leave the room.

As you can imagine, the video footage of the kids is quite entertaining. Fidgeting, squirming, staring at the marshmallow.

The study seems innocent, but over a decade later, the results of the famed Marshmallow Experiment were eye-opening. The kids who delayed gratification and received two marshmallows went on to get better SAT scores, had lower levels of drug and alcohol abuse and were even healthier.

Further, the researchers followed up with the test subjects over 40 years later and the results were the same. The ones who delayed gratification as children were more likely to succeed in life.

Why Do I Tell This Story?

Well, it’s the same way with money. By delaying gratification, we set ourselves up for success. At times, it is difficult to see this. But if we know “why” we need to save, it can helps us to actually do it.

As the philosopher Friedrich Nietzsche once said, “He who has a why to live can bear almost any how.”

I’d like to alter that a little, “He who has a why to save can bear almost any how.”

Here’s why you need to start saving now.

The Why Of Saving Money

The #1 investing secret is time. Not elaborate trading strategies or insane amounts of research. It’s time.

Let’s run through a scenario.

Picture this: Phil and Todd are new college graduates and best friends. They both end up getting great jobs at the same investment bank right out of school.

However, Phil knows about the power of compound interest so he saves as much as he can during the first year of work. Todd, on the other hand, doesn’t really care because it isn’t interest-ing (pun intended).

After expenses, Phil saves almost $11,000 during the first year, $10,733.80 to be exact. Todd doesn’t save anything because it is too difficult (he would’ve eaten the marshmallow immediately).

Phil puts $10,733.80 into the stock market. Todd, well, he just bought a new car.

Fast forward 30 years, both guys are 53 years old. Phil hasn’t put a penny more into the market since that first year after college. On the other hand, Todd wakes up one night in a sweat. He realizes he hasn’t thought about retirement at all. He was too busy trying to impress everyone with lavish vacations, European sports cars, and a ritzy zip code.

So he buckles down and decides he needs to start saving and investing as soon as possible. He makes quite a bit of money so he starts socking away $20,000 a year. And he does this for the next 20 years. In total, he saves $400,000.

Fast forward another 20 years, and both guys are 73.

Who do you think came out ahead?

The Answer

Phil who put less than $11,000 dollars in the stock market? Or Todd, who saved and invested $20,000 a year for 20 years?

If both men received the same 10% returns over time, the results actually come out as a tie. Well, Phil will be 5 cents poorer.

Phil’s total at 73: $1,260,049.94
Todd’s total at 73: $1,260,049.99
Phil’s amount put into the market: $10,733.80
Todd’s amount put into the market: $400,000

There is so much financial advice circulating in the news and on blogs and on TV, but this lesson is really the only one you need to grasp. Be Phil, not Todd. In finance, rather than counseling, time heals. Let time do its thing.

But this can only happen if you start saving. NOW.

The more you save, the younger you are, the better off you will be. It’s that simple. The power of compound interest will take care of the rest. So now that we can see the “why” of saving money, let’s dive into the “how.”

The How Of Saving Money

Here is the part of the article where we zoom in and break the problem down into actionable steps so we can make daily progress.

Not to be Captain Obvious, but the key to saving money is not spending it. We’ll give some tips and tricks, but fundamentally, it’s that easy. Spending fewer dollars than you make is the only way money will accumulate.

Let me preface this with something important. There is more to life than money, so if you find yourself extremely miserable with no friends because you are doing so well at saving money, maybe you need to tone it down.

Ok, got that off my chest…

Let’s skip the chit-chat and dive right in. Here are eight underrated ways to save money.

1. Eat Cheaper

You don’t need to waste $20 in one night because your friends wanted you to go eat at Chili’s with them.

Stay at home, eat those leftovers, and save that money! Remember, convenience is expensive! Skip the drive thru and pack a sandwich.

Estimated Savings: $50 per week!

eating cheaper

2. Forget The Brand

Branding = more expensive for no reason!

If you are still buying name brand razors, groceries and clothing you are spending money for no reason. Often times, the off brands are produced by the same people who make the name brands! All you are paying for is the name.

Learn how to compare prices at the grocery store and ditch the big brands.

Estimated Savings: $25 per week!

3. Quit Bad Habits

Stop smoking. Stop drinking excessively.

If you smoke a pack a day, you could be spending $3,650 a year or more!

If you drink a 30 rack of beer a week, you could be spending $1,500 a year or more!

It always amazes me how many people say they have no money to spend money or invest, but they are happy to shell out money towards a bad habit like smoking or drinking!

Estimated Savings: Up to $5,000 per year!

4. Cancel Unused Memberships

Are you paying monthly for a music app that you don’t even use? Or maybe a gym membership? Think about it, or check your card transactions if you’re not sure.

Paying for things you don’t use is basically throwing money down the drain.

Estimated Savings: $100 per month!

5. Stop Buying New Clothes

Do you really need a new pair of shoes?

Sometimes you do, but most times you just want to spend money.

Try to resist the urge of buying a new sweater that you saw at a store, because chances are it will get lost in your closet and you won’t really use it. This is something called dead money! That money could be earning you interest or dividends, but instead it is sitting in your closet.

Estimated Savings: $100 per month!

6. Understand Wants And Needs

If you are buying something, ask yourself “Is this something I want, or something I need?”

Use this strategy for purchases large and small.

Do this every time you’re going to buy something. It doesn’t have to be long and intense, just quick and casual. You might just realize you were going to waste money for no good reason.

Better yet, follow the 30 day rule! If you want to buy something, put it on a list. If you still want it in 30 days, buy it. This eliminates the impulse purchase!

Estimated Savings: $200 per month!

7. Consider Your Future Self

If you’re going to buy something expensive, ask yourself, “Will my future self be disappointed with my current decision to spend so much money?”

Future you might thank you.

8. Be Smart About Credit Cards

Credit cards give you the option to spend money that you don’t really have. This creates debt. You don’t want to be in debt.

Instead, use credit cards responsibly. Use them for small purchases like gas, then pay them off in full monthly.

Estimated Savings: Could be $1,000 per year or more!

credit card

9. Cut Your Services

If you aren't using your landline phone or cable subscription, cut the cord! There are countless alternative streaming options nowadays.

Estimated Savings: $200 per month!

10. Entertainment Expenses

You might choose the movies, a restaurant, or bowling as ways to have fun. It’s fun to have fun.

But fun does not have a price tag. You can have fun playing basketball, having a picnic, or watching movies at home!

Be flexible and creative with your entertainment. Set a monthly entertainment budget and stick to it!

Estimated Savings: $200 per month!

11. Free Transportation 

This kills many birds with one stone.

First off, if you make it a goal to exercise, this is a great way of doing so. You are multitasking by traveling to your destination while working out.

In addition, it spares you from having to fill up your gas tank every week, resulting in huge savings.

Estimated Savings: $20 per week!

12. Carpool 

This alternative works if you’ve got a close friend who works with you. If both of you work out, shop or work at the same place, go in one vehicle. You can even take turns. Whoever drives gets to choose the radio station.

Estimated Savings: $20 per week!

13. Avoid Scratch Off Tickets

The lottery is simply a tax on the stupid. If you are in the habit of buying a lotto ticket with your morning coffee, skip the ticket! (Skip the coffee too and brew at home...)

Estimated Savings: $50 per week!

14. Defensive Driving

Speeding can make your tank run out quickly. It also leads to more wear and tear on your brake pads, meaning more frequent replacement. Stop this bad habit, as it’s illegal and it’s expensive!

Estimated Savings: $10 per week!

15. Turn Off Lights

Make the best use of natural sunlight. Turn off the lights, let the light come in from the windows, and relax, knowing that your next light bill will be smaller.

Estimated Savings: $15 per week!

16. Buy Food In Bulk

Buying food in bulk saves you time, energy, gas, and prevents you from being in an environment where you want to spend money.

Try making a bigger shopping list in order to spend less and save more.

Estimated Savings: $10 per week!

17. Don’t Shop Hungry

Shopping hungry will make you think that you need SO much food, when you really don’t. Eating a dozen muffins seems like nothing when you’re hungry. When you’re not hungry, you may not want even a single muffin.

Try to go shopping 30 minutes after you eat. This will ensure you’re not shopping out of a short term feeling of immediate hunger. Go with a list and plan what you will be buying ahead of time.

Estimated Savings: $25 per week!

18. Pay With Cash

Numerous studies have found that people who pay with cash spend less than those who use a card.

Estimated Savings: $100 per week!


19. Customer Loyalty Programs

These programs are run by stores in order to maintain customers.

By tracking your purchases, and being loyal to a select few stores, you can start earning rewards and discounts.

Just be careful. Many of these customer loyalty programs encourage spending to get rewards! Don't fall for this trap.

Estimated Savings: $50 per month!

20. Make Coffee At Home

What’s the point of coffee? It wakes you up and gives you energy.

A Starbucks latte with 60% sugar might taste good, but it’s really unhealthy, expensive, and overrated.

Make your own coffee if you don’t already. It’s a healthy and cheap resource.

Estimated Savings: $1,500 per year!

21. Plan Out Meals

Make a weekly schedule of breakfast, lunch, and dinner.

Buy ingredients ahead of time to avoid last minute dashes to the grocery store.

Estimated Savings: $25 per week!

22. Avoid Small Purchases

Many small purchases add up. The daily trip to the vending machine at work counts!

Estimated Savings: $5 per week!

23. Eat Out Less

Restaurants are way more expensive than they seem. You end up paying for refills and a tip that you didn’t factor into your overall price.

Yes, your plate might only be $12, but your tip, refills, and appetizers can make it $25 or more.

Estimated Savings: $100 per week!

24. Find Free Entertainment

We are humans, we need enjoyment.

Avoid spending money to enrich your life. Playing sports, hiking, picnics; these are all cheap and rich ways to spend your times. They’re definitely better than doling out $15 for a ticket to watch a movie with your friends.

Everyone needs to find something that they do that costs no money! Otherwise, you will only be happy when you are spending money.

Estimated Savings: $100 per month!

25. Avoid Checkout Line Shopping

This part of a store is a collection of stuff you don’t need. Soda bottles, candy, magazines, etc. I have heard some refer to this as the impulse isle!

Don’t even think about buying anything in these sections, because I’m pretty sure you didn’t write “Snickers Bar” and “Ring Pop” on your shopping list.

Estimated Savings: $10 per week!

26. Use Coupons And Promo Codes

You can simply Google these or find them at restaurants and stores. Or, clip coupons on Sunday for your groceries! Just don't buy anything you usually do not.

Estimated Savings: $25 per week!


27. Skip The Happy Hour

If you grab a drink with friends a few times a week, consider drinking at home with your friends instead. It will save you and your friends a lot of money! Bars charge a huge markup on alcoholic beverages.

Estimated Savings: $50 per week!

28. Spend Time, Not Money

Instead of spending money with your friends, spend time instead. It is just as easy to walk through the park as it is to walk through the mall.

Estimated Savings: $20 per week!

29. Collect Spare Change

Most people underestimate spare change. Stash yours away as a simple method of saving money. Make sure to always keep it in an accessible place, like your car or in a jar at home. This comes in handy and can amount to large figures!

If you don't use cash, find an app that rounds up your purchases and accumulates the spare change in a savings account!

Estimated Savings: $100 per month!

30. Leave Your Wallet Home

If you are going to school, for example, there’s almost no need to take money with you.

If you are going out somewhere, and you know you are not going need money there, resist temptation and leave your money at home.

Estimated Savings: $20 per week!

31. Learn To Say No

A lot of people let other people waste their money. Learn to say “no,” whether they ask you to go to a concert or out to eat with them. Offer to spend time with them, not money!

Estimated Savings: $100 per month!

32. Have A Weekly Budget

First, you need to calculate food, memberships, bills, gas, etc.

Come up with a number, an amount of money that you need to have each week. Then, try to stay within this budget.

Estimated Savings: $50 per week!

33. Track Your Expenses

Where is your money going? Once you answer this question with specific details and specificity, you’ll realize there’s a lot of stuff you can painlessly cut back on.

Estimated Savings: $50 per month!

34. Shower Faster

Most people get caught up in the shower, singing their favorite song or thinking about their next business venture.

Instead, take a brisk shower, get out, and get on with your day. Water bills can be reduced largely this way.

Estimated Savings: $10 per month!

35. Pack Lunch For Work

You don’t have to go out, and you don’t have to spend money. Make yourself a full sandwich with snacks and sides. Some people spend as much as $20 a day on lunch!

Estimated Savings: $75 per week!

packed lunch

36. Set Savings Goals

Those jeans might look great on you. But, are they really in line with your goals? Will this $100 be better spent on pants or on your savings account?

Estimated Savings: $100 per month!

37. Tax Yourself

In The Richest Man In Babylon, it talks about imposing a tax on yourself. Commit to doing this and tax yourself before you have a chance to spend that money! Start with as little as 1% and build up from there.

Estimated Savings: UNLIMITED!

38. Avoid Spend To Save Gimmicks 

It is impossible to spend money and save money at the same time. Don't buy that toaster because you will save $50 with the mail in rebate.

You didn't save $50, you just spent $50 less. The truth is, that rebate is already factored in and they are still making a profit on the sale! Plus, a lot of people will forget to mail it in.

If your toaster works fine, why buy a new one? Spend to save gimmicks are all over, so watch out!

Estimated Savings: $50 per month!

Talk down that inner voice with the voice of reason. Follow these tips studiously and you will see your savings blossom. Your future self will thank you!

39. Enjoy The Beers At Home

A lot of us enjoy going out with the guys or the girls for drinks. Your frugal lifestyle doesn't have to make a dent in your social life! The cost of drinking at home versus going to a bar is far cheaper. Consider inviting everyone over to your house for drinks, or rotate each week!

Estimated Savings: $50 per week!

40. Consider Long Term Costs

Far too often, people are lured in to the upfront cost of something without considering the long term costs. A perfect example of this is pets. That gerbil might seem like a bargain for just $25, but what most do not consider is the ongoing costs for food, bedding, toys etc. Now, we are not saying that you shouldn't have pets! Just consider long term costs over the lifetime of the animal instead of the upfront cost. Maybe this leads to to stick to one dog instead of two.

Estimated Savings: $100 per month!

41. Repair Worn Out Clothes

What do you do when your shirt loses a button or your pants tear at the knee? Most of us throw these items away. The reality is, these clothes are still perfectly fine and a minor repair could bring new life to them. Consider repairing your worn out clothes instead of buying new. At the very least, take your worn out jeans and use them for yard work and gardening. This will help you get more life out of your good clothes!

Estimated Savings: $100 per year!

Money Mistakes To Avoid In Your 20's

While we are at it, let's cover the biggest financial mistakes to avoid in your twenties. If you save money with the ideas above, but end up making one of these mistakes, it essentially defeats the purpose.

Now’s the time to understand and be on the lookout for money mishaps that can easily be made in your 20s…and beyond!

Check out the following 18 no-no’s, and consider yourself smarter.

Not investing in the stock market.

One of the biggest mistakes young people make is not beginning to invest. Compound interest is, essentially, how much your money grows over time. The more time you give your money to grow, the larger your net worth becomes!

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Spending too much money.

It seems simple enough: Never spend more than you take home in your pay check.

But it’s easy to fall into this trap when you’re not tracking your expenses down to the penny. Always remember to live within your means! Sure, it’s nice to buy a round of drinks for friends on Friday night, but how much is that going to cost, and what kind of dent will it make in your monthly budget?

Which leads to the next point…

Comparing yourself to others.

This will bring nothing but trouble. Envy is an emotion to which we can all relate.

Your friend, neighbor or co-worker may have the best car on the market, a fabulous home, take luxury vacations, but here’s the thing: you have no way of knowing HOW they’re amassing these things. Could be, they are spending money they don’t have.

If they’re plunking down the old credit card for purchases, this won’t serve them well in the long run. In fact, it’s one of the worst financial decisions people make, no matter what their age and income. The lesson here is to be satisfied with what you have. Spend more time being grateful and less time being envious!

Not setting financial goals for yourself.

This is imperative for both short and long-term goals. Maybe you want to buy a new cell, outfit your home with new furniture, or save enough to invest in a stock portfolio. You need a plan with precise steps on how you can make that happen.

Remember, it won’t happen overnight, and it won’t happen without a lot of pre-planning. Set aside a very specific amount of your earnings each month towards these goals, and stick to it. Don’t be deterred by instant gratification items like a 4-Star dinner or weekend at the casino…these will put you right off your path and your sound financial plan. It’s important to WRITE DOWN your goals and how you will meet them.

Consider them written in concrete, and don’t modify them. Before you know it, you will have reached that financial goal and be making smarter money decisions as a direct result.

Being unrealistic about what is possible.

You need to be brutally honest with yourself about your finances and expenses.

Sure, you may make a pledge to yourself to never eat out, but if you’re starving and there’s nothing in the fridge, or if you have to join a colleague for a business lunch, this will break that rule. Be realistic about what you can and can’t do.

For example, vow to buy groceries and bring your lunch to work most days of the week. Learn to cook some simple meals like tacos and burgers and make dinner on weekdays. Give yourself a break Saturday night and get takeout or order in from Grubhub.

Living off credit cards.

This may seem like a no-brainer, but the vast majority of people have credit card debt that will take years, if not decades, to pay off.

Most of the temptations to buy on credit are for instant gratification items (think: not groceries, which are needs instead of wants) that won’t bring much enjoyment when you start seeing the interest adding up. If you absolutely can’t avoid making a purchase on credit, pay off the balance immediately, and don’t even think about paying the minimum amount monthly.

A better bet than using any plastic – including debit cards – is to use old fashioned hard cold cash. Studies show when you pay in cash, you’re less likely to overspend than when you don’t have to hand over your hard-earned dollars. Even better, put a precise amount of cash your wallet (money clip, whatever), and spend not a penny more than you have allotted for the entire weekend. Well, maybe a penny more, but you get the idea.

Not having an emergency or rainy day fund.

Yea, so you’re 25, what could happen, right? Think again.

Emergencies can happen to anyone at any time. Your car breaks down. You twist an ankle at the gym and have medical bills. Your basement floods. Your work hours are cut back. These are worst case scenarios for sure, but the point is, you need a cache of cash to tide you over.

Experts recommend having a savings of 3-6 month’s salary in emergency funds.  Save it, don’t spend it.

Having no side hustle.

We know you work full-time. And we know you need down time. But there must be a few throw-away hours each week when you allow yourself to do…nothing. Get motivated and get moving!

A side hustle could bring in hundreds of dollars more per month, and you might even enjoy it. Walk dogs, rake lawns, personal shop, wash cars, do whatever sounds interesting and maybe even fun. Find a niche need and fill it.

Who knows, you might find that entrepreneurial spirit that has lain dormant ever since you quit selling Boy Scout popcorn door-to-door.

Allowing student loans to stop you in your tracks.

Granted, college tuition is through the roof. But if you’re in your 20s, you will never have the time and energy again to pursue higher education.

So, take advantage of the opportunity. Live off campus, go to a community college, then transfer those credits to a four-year college. Buy used books and eat Ramen Noodles. Take classes part-time while you maintain a full-time job. Forego sleep if you must. Research and apply for scholarships based on income and also on merit. Do your best to avoid student loans, which will need to be repaid with interest.

Consider pursuing your degree an investment in your own future. Aim for a better paying career that will motivate you to work hard and excel. Your 20s are a great time to further your education, and there are many ways out there to do it without digging yourself into a financial ditch.

student loan

Delaying retirement savings/investing.

The sooner you start stashing money away into a 401(k) or other retirement account, the better. You want to give your money optimal time to accumulate interest and build up a nest egg that will benefit you in your old age (yes, you will be old one day).

Financial experts recommend squirreling away around 10 percent of your income starting in your 20s. It’s not a huge stretch for you right now, and it will pay off remarkably to your future self.

Avoiding the topic of credit score.

Having an excellent credit score will be an enormous benefit in all your financial endeavors. You will need it to rent an apartment, buy a car, get a loan or take out a mortgage. Start with a single credit card and pay off the entire balance monthly. Never miss a payment or pay a late fee. Stay well within your credit limit.

For example, if your limit is $7,500, resist the urge to rack up $7,499 in charges! Keep it low and pay it off immediately to build a good credit history. Also, avoid opening too many accounts at one time. It’s much easier to keep track of one account and will reign in your utilization as well. This leads to the next item to avoid.

As you know from all the commercials, there are plenty of free credit score sites that take literally seconds to pull up your number. Knowing where you stand is key to your overall financial well-being.

If your score is low, take immediate steps to improve it. If it’s good, put all your energy into maintaining it. Challenge your friends to see who has the best score. Loser buys beer. Actually, loser might not be able to afford beer.

Avoiding all risks.

You’re young, probably single, and it’s a great time to grab life and see where it takes you.

Smart risks are things like moving to a new area with better job opportunities, launching your own business, or furthering your education. In a few short years, you will likely have far more weighty responsibilities on your shoulders (think marriage, mortgage, kids). Now is the time to take that leap – but make it a smart, calculated risk.

Having no insurance.

A wise fortune cookie once said, always expect the unexpected. Renter’s insurance may seem frivolous…until the ceiling leaks and ruins your leather sofa, a freak lightning storm fries your computer or television, or a break-in results in losing your jewelry.

For the small monthly cost, renter’s insurance pays you back a thousand times fold in security that it’s there when you need it.

Then, there's health insurance.

OK, so maybe the last time you had a cold was 2010. But who knows, you could forget to get the vaccine and come down with the flu and need a doctor’s visit. Twist a wrist at the gym and need an x-ray. Even a single visit to a walk-in emergency clinic could rack up charges quickly, or worse, you might be tempted not to seek medical care.

Don’t play this risky game. Invest in low-cost health insurance and for goodness sake, get that flu shot.

Article written by Ryan Scribner
Ryan Scribner is a personal finance YouTuber that is approaching 500,000 subscribers on his channel. He has created a thriving business around his passion, which is helping others navigate the complicated world of investing.

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