Younger Workers Are Indeed Saving Money, but They Need to Do Better

Man dropping coin into piggy bank

Americans in general aren't known for being great savers, and younger ones in particular often struggle to put money away on a consistent basis. (We can blame low wages and whopping student loan balances for that.) But new data from savings tool Acorns reveals an encouraging trend: Among U.S. adults aged 18 to 44, 49% save up to $100 in an average month. And while that's not a ton of money, it's certainly better than nothing. On the other hand, only 14% of younger Americans save over $400 in an average month, while 19% spend more than they make each month.

Clearly, spending more than what your paycheck delivers is a dangerous move, but saving inadequately for retirement could also hurt you down the line. In fact, setting aside $100 a month over a 30-year period will leave you with about $113,000 for your golden years, assuming a 7% average annual return on investment. Frankly, that's not a whole lot of money to work with as a senior, especially over the course of what could be a 30-year retirement or longer.

A better bet, therefore, is to ramp up your savings so that you're not only set for emergencies , but are also able to sock away a respectable sum for the future. Here are a few steps you can take to do better.

1. Follow a budget

It's really, really hard to save money when you have no idea where your paychecks are going month after month. If you're not following a budget, one of the easiest things you can do to ramp up your savings is to create one immediately. This will show you where your money disappears to regularly, and where you can cut back on expenses to free up more cash to save.

To set up your budget, comb through your bank and credit card statements to identify your various recurring monthly expenses and what they cost. Next, factor in once-a-year expenses, like annual fees for services you use. Then, compare your average monthly spending to what you earn. If the numbers show that there's not much room for savings, you'll need to start slashing your costs, whether that means downsizing to a smaller home, giving up a car you can technically do without, or limiting the extent to which you eat at restaurants and order takeout

2. Get a side job

The more money you earn, the more opportunity you should have to save, at least in theory. But while you can't march into your boss's office and demand a raise, you can boost your income by getting a side job on top of your regular one. The money you earn from it can then be used to fuel your savings so that you're not relying on cuts in your budget alone to fund your nest egg.

Of course, working on the side when you already work full-time can be a daunting prospect, but you don't need to resign yourself to some boring gig you'll dread doing. Rather, you can take a hobby and turn it into a money-maker, whether it's cooking, crafting, or graphic design.

3. Be smart about banking your windfalls

Many folks come into money during the year that doesn't arrive in paycheck form. For you, that might mean a performance bonus, a tax refund , or even a gift from a family member. Sticking that money directly into savings is a good way to make up for those months when you fall short of your goals, so resist the urge to spend newfound cash that comes your way.

Neglecting your long-term savings could land you in a pretty tight spot once retirement rolls around. While saving any amount of money on a regular basis is certainly preferable to saving nothing at all, remember that most seniors need roughly 80% of their former earnings to live comfortably in retirement, and Social Security, in a best-case scenario, will only provide about half that amount. If you don't take steps to save appropriately, you might find that retirement is nothing more than a multi-decade period of disappointment and financial stress.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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