Saving is the bane of everyone’s life, but it’s time to be sensible. Millennials are notoriously bad at saving for a variety of reasons. Many of us are crippled by lower salaries and more extortionate rent than previous generations, and the rest are just disillusioned with saving in general.
It’s not hard to see why we have such an issue with saving, but it’s imperative that we do save (even if we are on the brink of WW3, thanks Drumpf.) If you ever want to hit that £40k mark for a house deposit (*cue mental breakdown*) it’s time to knuckle down on your finances.
But how much should you be saving each month? What’s a good starter rate for savings in general? My advice would be to follow the 50/30/20 rule.
The 50/30/20 rule
When you’re thinking about how much you should be saving each month, try and stick to the 50/30/20 rule. Try and stick to this rule, as you’ll probably find that it’s actually not that difficult – and it still allows you to spend money on important things (clothes, going out etc) whilst also saving at the same time.
Here’s what you do:
Spend 50% of your paycheck on things you NEED
This should include things that are absolutely essential. This includes things like food, rent, bills and – shockingly – clothes. So there’s no need to feel bad about going on that last minute ASOS binge, as long as you don’t go over 50%.
Many of us will find that we’re spending at least, if not more than, 50% of our salary on rent. This, to me, is completely crazy. Major cities that do suffer from extortionate rent – e.g. my hometown of London – are a problem, I can’t lie. But there are places to be found where you don’t have to spend your entire paycheck on rent. Living within your means is the key here. Don’t try and live that champagne lifestyle if you’re on a lemonade budget.
Spend 30% of your paycheck on having FUN
Nobody likes the plain Jane who stays home all the time. You need to have fun and live your life, don’t just sit and watch it pass you by. You should be spending 30% of your paycheck on things you enjoy, like dinner with friends, drinking, trips, holidays etc. Anything that gives your life flavour.
Put the final 20% of your paycheck into SAVINGS
This final 20% of your paycheck is what goes into savings so that you can feel like you’re making a dent in that eventual house deposit or whatever it is you’re saving for.
But the key is to SAVE.
Living within your means and saving is the key here. Savings are absolutely no joke, as anyone who can’t rely on the Bank of Mum and Dad will tell you.
So follow the 50/30/20 rule, take control of your finances and start saving. Show them fucking Baby Boomers what’s up.