For all the reasons you can imagine, with high living costs and a precarious job market being the biggest drivers, financially savvy 20-somethings are getting pretty creative when it comes to saving money. Some of these money hacks are old hat, but a few are newer and worth exploring, and all are strides toward building successful lifelong financial habits.
Setting up smart banking systems early
Money-savvy 20-somethings are seeking lower-cost banking and investing options that are primed for growth. They are smartly turning to institutions that don’t have transaction fees, will offer interest on their small but growing savings accounts, and have slick, easy-to-use UX that dish out AI-based insights and tips on spending. For investments, the same applies. Twenty-something investors are filling up their TFSAs and FHSAs with ETFs and some are choosing robo-adviser solutions that allow minimal contributions like $25 a month. They know the trick to growing money is to get started early and not to shy away from growth-oriented investments because they are so young and can afford to take on the risk.
Of course, if they’re fortunate enough to have a full-time job with benefits, and retirement savings programs are available (contributions can sometimes be matched! — that’s free money), they’re on it, attempting to maximize their employer’s matching component.
Rainy-day money for the win
Life happens: a car breaks down, a job is lost. Financially savvy 20-somethings know that’s where an emergency fund comes in. It takes time to build one, sometimes a decade to reach three to six months’ worth of expenses. To kick start things, many are starting small, say $500, then $1,000, by selling off their old sports gear or text books to come up with the initial contributions. The rest they build up through small but regular weekly automated contributions into a separate, no-fee, high-interest savings account that is not linked to their debit card!
Money tracking using AI and apps
Budgeting is possibly one of the most important financial skills a young person can learn and it turns out a lot of 20-somethings are embracing the practice. They’re leaning into AI to help set up budget categories and amounts that make sense based on what they’re earning. And, either with a free app or spreadsheet, they’re getting a clear picture of the ins and outs of their money every week. Using AI insights, they’re getting real-time feedback on their spending habits, such as “your dining out last week was higher than usual.” With that intel, they can change their social calendar and plans for the rest of the month to do a better job of spending less.
Saying ‘no’ loudly, and being stronger for it
It’s called loud budgeting, and it’s where 20-somethings are sharing what does and doesn’t fit their budget. Unlike previous generations where money matters were super taboo to speak of, this gen doesn’t care about that. The pressure to keep up with spending, socially, professionally, even esthetically, is familiar to them, and they’ve been dealing with it since their teens. By saying, “that’s not a priority for me right now” when it comes to pricey outings or bachelor weekends, fast-fashion hauls or upgrading tech, it’s saving money and empowering their mental health. Twenty-somethings understand that real friends won’t care whether you’re wearing the latest hats or drinking $10 lattes.
Living with family or roommates for longer
This is now the norm. You’d be an outlier living on your own in your 20s. There’s no shame, and co-living is a fantastic way to save.
When renting, some 20-somethings are also room-sharing so that what would normally be a two-bedroom rental split by two people is split by four people. They’re clearing this with the landlords, who are in turn drafting up leases with multiple tenants named. To make this all work fairly, 20-somethings are proactively drafting up roles and responsibilities for their roommates, helping to establish boundaries early on.
And, when returning home to live with parents or older, more established siblings, 20-somethings are paying some kind of rent or contributing financially to things like utilities and groceries. This can be good, financially and socially, for the entire family.
What’s newer with this trend is its duration. These days, if the co-living arrangement is working well, 20-somethings are sticking with it for as long as possible, even if they might actually be able to finally afford to move out, in order to save.
Working multiple jobs and making it a social experience
The good gigs aren’t that plentiful right now and 20-somethings are doing their best with the jobs they can get. To get ahead, many are taking on another job (on top of their main role) or doing additional freelance or side-hustle work. It’s not uncommon for example to have a freshly minted 25-year-old teacher also doing nanny work in the evenings and on weekends, or slinging drinks at the local bar on a Friday or Saturday night. Also commonplace are 20-somethings working three part-time jobs because there isn’t anything full-time. These jobs are also turning into a social connection for 20-somethings; they’re making friends and making the most of having to spend so much time working.
General frugality is helping money-savvy 20-somethings manage rising costs and still live their best life. They’re looking for good deals, are more aware of scams and bad deals, and have what appears to be an understanding that debt is now the norm, but managing it in the smartest way possible is key.
