8 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?

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

Phil’s Results:

Screen Shot 2019-01-10 at 3.04.42 PM.png

Todd’s Results:

Screen Shot 2019-01-10 at 3.04.50 PM.png

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. Don’t eat out.

Eating out is fun and it is enticing. But it adds up. Eating 3 times a week at Chipotle could put you back about $30. Over a year, that’s $360. Nothing to sneeze at. As an added bonus, if you learn to cook, you can save money and have exactly the food you want.

2. Make your own fun.

A lot of times, we spend money on experiences; going out to the movies, bowling and
whatever else sounds fun. But there are so many ways to have a good time without spending money. We can play sports, games, or explore. Creativity wins you extra points!

3. Care less about what people think.

If you need to have the latest gadgets and the coolest shoes, you might not be cut out to save a lot of money. The good news is you can change. At the root of buying stuff for ourselves is caring too much what people think of us. We try to impress them by buying nice things. You know what is more impressive? Being kind and caring about people, not what they think.

4. Look for deals.

If you must spend money, make sure to do a little research to get the best deal you can. Some people take this really far and become professional coupon clippers (I kid you not). One about buying cheap stuff is that it can actually be a worse deal in the long term if it doesn’t last. Keep that in mind.

5. Walk or ride a bike more places.

Gas is a big expense, especially if you live in a city. While it may be impractical to ride your bike everywhere, try to do it whenever possible. You’ll get in great shape and save money in the process.

6. Be single.

I’m joking… partly. If your significant other guilts you into spending inordinate amounts of money on them, it might not be the healthiest relationship. While it’s unlikely you’re looking for relationship advice here, this can be a tell-tale sign. Your significant other should like you for you, not your money.

7. Don’t carry around cash.

Cash is dangerous because it is so easy to spend. Since you don’t see your bank account
number go down, it feels like Monopoly money. Instead, deposit all cash into your bank as soon as possible. By doing this, you will increase the friction it takes to spend money lowering the odds you will actually do it.

Some will find that it is actually BETTER to spend cash! By seeing the money leaving you hand, it gives you a better idea of how much money you are spending. Try them both and see which strategy works for you.

8. Increase your income.

Often, most financial blogs get into the nitty-gritty of saving money like we’ve done here. An underrates way to save more money is to keep your spending habits the same but make more money. You can do this by hustling (washing cars, cleaning, helping out), learning and implementing new skills, or investing smarter. By starting your own little business, you can make a nice chunk of change. You can walk dogs, do website design, cater, sell products online and so much more. It doesn’t have to be elaborate, just start something and learn as you go.

Conclusion: Final Thoughts

Though saving money isn’t fun, it will change your life. If you can wait for two marshmallows, you will increase your odds of living the life of your dreams exponentially.

One other tip that has worked well for myself and others is coming up with a monthly budget. Simply writing your expenses out on paper can help you to realize exactly where it is going!

Delay gratification. Remember “the why.” Be Phil, not Todd. And try out these eight tips for saving money.

You’ll be on your way to becoming a millionaire before you know it. If you’ve read all the way up until this part, it shows you really care about this. So I’d put my money on you!

Happy Saving,
Ryan Reeves

Ryan Reeves is CEO and founder of Investing City, a blog to help people invest better. 

38 Essential Tips To Save More Money Now!

Whether you’re saving for a house, looking to buy a new car, paying off a student loan or any other financial circumstance, the more money you have, the greater success you will achieve.

Have you ever gotten paid and then doled out all that money to living expenses, things like rent, groceries, gas and other necessities? Then found yourself waiting for the next paycheck, without any idea where your money had gone?

Living paycheck to paycheck is an unfortunate situation many people find themselves in, but there are ways to carve out savings for your future.

Most people know little about investing; they are only concerned with spending.

You cannot work to spend.

You need to work to invest.

Check out our beginner’s guide to investing in the stock market here!

Here are our 38 essential tips for spending less and saving more 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!

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!

Cigarette Smoking, Pixabay

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. Avoid 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 debit cards and real cash. Credit cards only increase your monthly expenses.

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

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!

Cord Cutting.jpg
Cutting The Cord, Flickr

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!

What’s Your Excuse? US Ad Council

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!

Coffee Maker.jpg
Coffee Maker, Flickr

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!

Grocery Checkout.jpg
Grocery Store “Impulse Isle” Checkout, Wikimedia

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!

Wallet, Pixabay

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!

Save Water.jpg
Simple Ways To Save Water, Pinterest

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!

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!

Richest Man Babylon.jpeg
The Richest Man In Babylon, Medium

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!