While a third of millennials are trying to put money into a savings account whenever they can, one in 10 are still living pay cheque to pay cheque, new research has found.
Commonwealth Bank found that more than half (61 per cent) of Aussie millennials don’t have a regular savings plan and want to have more open discussions to learn how to better manage their money.
Yahoo Finance spoke to CBA executive general manager everyday banking Kate Crous to get some helpful tips for young Aussies looking to boost their bank account.
1. The importance of setting a budget
While it may seem like an obvious one, setting a budget is an important first step in establishing how much money you have to spend and what is left over.
“There are many reasons why we find it hard to save, but it is always important to set a budget and work out how much you have available to put towards your financial goals,” Crous said.
“Start with knowing how much you need for your everyday expenses - your bills, groceries, transport and everyday spending. Then you can work out how much of what’s left you want to save.”
2. Be specific and set a goal
If you don’t know what you are saving for it can be easy to lose your way. If you have a specific goal in mind it can help you create a solid saving plan that you’re more willing to stick to.
“This can also motivate you to cut down lifestyle spending or help you adjust your budget to save more,” she said.
The CBA research found that when it comes to the financial achievements that make millennials feel most ‘adult’, the most significant is buying a house (58 per cent), but less than a third (28 per cent) have been able to get there.
It’s okay to have smaller day-to-day goals as well to help make you feel motivated. The research found that having a fridge full of groceries made 22 per cent of young people feel like they had achieved something.
3. It’s okay to stumble
Saving can be difficult sometimes when the day-to-day gets in the way. Sometimes it’s something as simple as an unexpected birthday celebration that you hadn’t budgeted for, or more serious like the financial impact of COVID-induced lockdowns.
But it’s important to realise those unexpected events are why it’s important to have that rainy day fund.
“COVID has definitely reinforced the need to have savings set aside for the unexpected. Sometimes unexpected costs can get in the way, however there are ways to help manage your savings for things that can be avoided,” Crous said.
Crous said one way to help prevent you from dipping back into your savings is to set up an automatic transfer from your everyday account to your savings on or soon after pay day, which means you won’t accidentally spend it.
“If you don’t save one month or even if you dip into your savings and actually go backwards, that’s ok,” she said.
“Just reset and restart the following month. The important part is you build good savings behaviour habits over the longer term.”