This post first appeared on A Wealth of Common Sense.
It seems young people get blamed for everything these days. Millennials have been accused of killing marriage, home ownership, chain restaurants, diamonds, department stores, face-to-face interaction and pretty much every long, boring sporting event imaginable.
They’re also being accused of killing their own net worth. Here’s a recent survey from Bankrate.com:
In particular, younger millennials (ages 18 to 26) are falling victim to vices that may feel good in the moment, but are far from worth it in the long run:
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54 percent of people in our age group eat out at least three times per week.
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30 percent of millennials say we buy coffee at least three times a week.
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51 percent typically go to a bar at least once a week. (Among people ages 21-26)
Bottom line: We’re spending a lot of cash on vices.
This is pretty standard personal finance advice. If you just stop buying coffee every day or bring a brown bag lunch to work you’ll be a millionaire in 250 years!
The problem is this advice doesn’t really work. Nickel and diming your way to savings is no way to go through life. You need to prioritize the little things that make you happy and stop wasting money on the little things that don’t.
But the real way to save money as a young person is by focusing on the big ticket items in your life.
Millennials are constantly being told that student debt it too high, wages are stagnant, the Great Recession made it difficult to find a job and the future is going to be a terrible place. I never liked the idea of blaming macro factors on your own personal situation. All of that stuff is out of your control anyway.
While it’s not easy, here are some ways young people can actually take control of their finances and save a little money:
Live like a college student for a few years. College was the most fun period of my life…and I was basically broke the entire time. I never went out to nice dinners. I rarely purchased new clothes. The houses and apartments I lived in were dumps. If you can simply keep your lifestyle the same for a few years after school that can be a huge head start to getting your finances in order. You can pay off some student loans, develop good saving habits and avoid crippling credit card debt. And you can still have fun when you’re young without spending a ton of money.
Skip the starter home. Buying a house is a huge commitment, requires a lot of work and a consumes a large part of your budget. There’s no reason to rush into buying a house when you’re young just because it seems like the logical next step. There’s nothing wrong with renting for a few years until you’re ready financially to buy a home. Another easy way to save money in the housing department is to live with roommates. Whether you buy or rent, housing will likely be your biggest line item every month. Splitting that cost is a simple solution to save more.