When it comes to saving money, the earlier you can start, the better. For Generation Z, broadly described as those born in or after 1997, now is a good time to start focusing on savings. Money-saving advice can be applied at any age, though, so it’s never too late (or too early) to start. If you or your kids are ready, these tips can help make saving easier.
Set your own rules
Before you save your first dollar, give yourself guidelines on what you can spend versus what you can sock away, says Lindsey Bell, chief markets and money strategist at Ally Bank.
This could mean writing a budget or simply setting away a percentage of any money you receive. “It doesn’t matter what the rule is, as long as you give yourself one and use it on a regular basis,” Bell says.
If you aren’t sure how much you can afford to save each month, you can start by taking a look at your major expenses.
Read a few of your recent bank statements to see where you’ve been spending your money, Bell says. From there, see if you can divert any of that spending into savings instead. Could you find $50 a month to save? $100? Start small, and don’t overthink it. “If you find after a few months that you’re unable to save what you planned, you can aim for a lower target,” Bell says.
For parents who want to help their children, Bell suggests talking to them about money first. “Have conversations about where it comes from, how it’s spent and how they may be able to start saving,” she says. From there, come up with some savings goals together that your kid is likely to achieve. It can help give them the confidence to start saving, Bell says.
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Find the best account
Where you put your money is nearly as important as how much you save. You’ll want to park your cash in an account that won’t eat away at your balance with fees, and preferably earns a good interest rate.
“Interest rates are low right now, so it may seem hard to see the value of some savings accounts,” says Cameron Zabko, a certified financial planner in Atlanta. In fact, the national average savings rate is only 0.06%, according to the Federal Deposit Insurance Corporation. But the best savings accounts have annual percentage yields that are much better, with some nearly 10 times higher than the average. Many of these accounts tend to be online-only accounts.
According to Zabko, who is a Gen Zer, an online account could be preferable for young adults and students who are used to working with mobile apps. “Being digitally-focused is a plus,” he says.
While you’re shopping for a good savings account, consider your options for an everyday spending account, too. Some institutions offer free checking accounts for adults and strong teen checking accounts for younger customers. The best checking accounts typically earn interest and have no monthly fees.
Go on savings cruise control
“Automation is the key to success,” Bell says. Once you have an account and a plan in place, make following through this task nearly effortless by setting up automatic deposits.
“I’ve found that for me and my friends, it’s a little harder to save if you spend everything first and then try to come up with money to save after the fact,” Zabko says. “But if you take the money out first (with an automatic transfer), it’s easier to save.”
Generally, transfers can be set up online and can be set to recur on a regular basis, such as each payday. For younger Gen Zers who may receive money by allowance instead of paycheck, banking apps often let users receive money electronically, and some also let users move a portion of their funds to a linked savings goal account.
Bag your first win
When you’re just starting a savings plan, give yourself a win by creating a short or medium-term savings goal to look forward to, Bell says. For a middle schooler, it might be new clothes or a mobile phone. For an adult working their first job or living on their own for the first time, it could be achieving $500 toward an emergency fund.
Carving out a short-term goal can make it easier to earn a “win” and boost your motivation to save for bigger goals, Bell says.
Look for ways to level up
Once you reach one goal or milestone, try to set a new, bolder one. Say you’ve been able to save $50 a month for several months, but you recently earned a raise. Could you increase the amount to $75 a month? If your tween has been pet sitting to earn money, could they find another client and plan to save all the new income? Little increases add up over time.
Saving doesn’t have to be hard if you take a few steps to set yourself up for success. Make a plan. Put your money in a high-yield account. Add a little to it on a regular basis, preferably automatically. The more time you have to save, the bigger the cushion you can build. For Generation Z, there’s no better time to start than now. For anyone, really, now is better than later.
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Margarette Burnette writes for NerdWallet. Email: firstname.lastname@example.org. Twitter: @Margarette.