With inflation on the rise, almost everyone is facing financial pressure, including young adults. They pay more for food, energy, rent, books, and other bills than they used to in the past few years. Most of them have little to nothing to save after receiving their wages. This persistent increase in prices has greatly impacted the personal finances of most young people. So, here are some valuable money-saving tips to help young adults make the most of their finances in an inflationary environment.
Effective Money-Saving Tips For Young Adults During Inflation
Inflation refers to the general increase in prices over time, diminishing the purchasing power of your money. It means the same amount of money will buy you less as prices rise. Thus, as a young adult, you need to develop a practical strategy to combat the effects of inflation. Through the money-saving tips discussed in this article, you will be able to make significant progress toward your financial goals.
1. Create a budget and stick to it
As earlier mentioned, young adults need money for many things. After discovering yours, it is crucial to create a well-structured budget. While a budget won’t stop you from spending, it will help you create a plan to save money. A budget enables you to make informed decisions about where to cut back and save money in an inflationary environment.
Budgeting can be confusing. So, you will need a budget calculator that will not only simplify budgeting but is designed to account for inflation, such as this Savings Calculator. This calculator will help you divide your income into savings, wants, and needs. With it, you can choose the percentage of your salary to save during periods of inflation.
2. Review your spending habits and prioritize saving
In the face of inflation, saving money becomes paramount. But first of all, you must identify where you are spending unnecessarily. A lot of things can lead to unnecessary spending, such as peer pressure. After understanding where you practice impulsive spending, identify your priorities.
Tracking your expenses will help you become more honest about what you need. Thus leading to changes in saving habits. By setting spending limits for different categories, such as housing, transportation, and entertainment, you get a clear picture of where your money is going.
Maintaining a record of everything you spend allows you to identify areas where you may be overspending and make necessary adjustments. To review your spending habits, get the last three months of your bank account statements. You can easily download this from your mobile bank application.
Another helpful strategy to save money is by automating your savings.
3. Income Generation: Explore side gigs and freelancing
Most times, young adults find it difficult to save during inflation because they have only one source of income. Having one source of income will leave you spending all your income and having nothing to save. So, consider a side gig or hustle. Starting a side gig doesn’t need much time. It is something you can do in a few free hours on weekends or after your primary job. Some recommendable side gigs include:
- · Delivering food from grocery shops or restaurants
- · Teaching English or any language online
- · Child care
- · Walking pets like dogs and cats
You can also leverage freelancing platforms like Upwork, Fiverr, and others if you have certain skills. There are plenty of job opportunities, such as writing, designing, and virtual assistance on these aforementioned platforms. If you have these skills, get started immediately. With proper time management, you can combine it with your regular job to earn and save more.
4. Cook at home
If you calculate the amount you spend on food weekly or monthly, you will be stunned! Young people love ordering their food online. While this is done for different reasons, such as a busy schedule, you should consider making meals at home to save money to beat the recession or inflation. Cooking at home also has lots of benefits, such as:
- Healthy food – Unlike foods ordered with an app, you know the number of ingredients to use on your food. Avoiding fried foods prepared in unhealthy oils becomes easier.
- Family – Cooking at home allows you to spend time with your loved ones. If you are living with your friend, making a meal at home will enhance the bond between you and your friend. You can even prepare the meal together.
- Time – Cooking at home saves your time, too. You can put your prepared meal in a freezer and only use a few minutes to warm it when you want to eat.
5. Create an emergency fund
The worst time any young adult will think of money saving is when there is an emergency. With inflation in mind, creating an emergency fund should be at the top of your financial goals.
Emergencies may not be life-threatening, but events that require unbudgeted money. Such unexpected emergencies might include paying for an exam, fixing a broken window, or a dental emergency. In order to not be left frustrated in such events, consider long-term savings. You can use the online savings calculator (mentioned above) to estimate savings for emergency goals. To save for emergencies, consider the following:
- Selling of items you no longer need in your life. There are lots of unwanted stuff in your home that you don’t use anymore. It can be your old clothes, furniture or books. Sell on Facebook Marketplace and other consignment stores.
- Use public or cheaper transportation. It is not cheap to maintain a vehicle. The cost of changing oil, gas, and others during inflation is high. Consider moving by train, riding a bike if you have one, and walking.
- Diversifying your income sources, like starting a side hustle like walking a pet or trimming flowers, can help you save extra cash for emergencies and provide stability.
Aim to save at least three to six months’ worth of living expenses in a liquid, accessible account. This fund will provide you with peace of mind and protect you from the potential financial pitfalls that can arise during periods of inflation.
6. Manage and minimize your financial liabilities (Deal with Existing Debt)
There is no young person who wants to be in debt during an inflation. This is because the cost of living and salary will always fluctuate. While you don’t want to lose your job in a time like this, it can happen. So, preparing for it by paying off your debt is a necessity. To pay off debt and reduce costs, you must make informed financial decisions like:
- Paying bills early. You can use different tech tools to achieve this. Additionally, setting up online bill payments from your bank account is advisable.
- Paying off your loans and credit cards with the highest interest rate is another strategy for dealing with debt. You will pay less interest when you do this. Utilize online financial calculators to assess debt repayment options.
7. Invest in commodities & appreciating assets
Last but not least is the power of investment. Young people can beat inflation, protect their savings, and grow wealth by investing in agricultural products, gold, and other commodities. These commodities do not only retain their monetary value over time, but they also increase in price value during inflation. However, approach commodity investments with caution as they can be volatile.
Another way you can combat inflation is by investing in appreciating assets. Consider diversifying your portfolio by investing in stocks, bonds, or real estate. Utilize an investment calculator, like the one provided by https://calculator.me/investment/, to assess potential investment opportunities and evaluate their potential returns. It will protect your money from losing its purchasing power during inflation.
Young adults, like other individuals, are significantly impacted by inflation. It becomes challenging for them to save money as their purchasing power is reduced considerably. Nevertheless, through responsible money management from an early age and practicing these seven effective money-saving tips and tools, you can stay financially savvy, informed, and in control of your financial destiny in times of inflation.
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We hope you find these 7 effective money-saving tips for young adults to combat the inflation helpful and informative. Please do not forget to share it with your friends as sharing is caring ❤️.