This summer, I’ve posted 10 columns on this blog and have had 817 visitors. I know, baby steps in the big, bold world of blogging, but I’m pleased with the early results. Readers span the demographics and today I’d like to focus the discussion on Millennials.
I love Millennials for many reasons, including my daughters and sons-in-law in this group, and also because of the hundreds of students I’ve known since joining the faculty at Lasell College seven years ago. So, if you were born between the early 1980s to the early 2000s, I’m talking to you.
What benefits would you notice if you started saving $5s?
For starters, it might help you use plastic less and cash more, giving you a super start on understanding where your money goes. It’s different spending five $20 bills than making a $100 purchase with a debit card. When cash leaves your hands, you feel it more than when you swipe a card, you know there’s been a loss. You’ll also get a charge when you get a $5 back as change knowing you’ve added to your nest egg.
Let’s address another issue—student loan debt—because for many Millennials, this is driving them either to credit card debt or moving back home with their parents. What if you started saving your $5s and at the end of every month, use your stash to pay down a little more of your principal.
According to a recent story in USA Today, http://www.usatoday.com/story/money/personalfinance/2014/11/19/millennial-money-habits-survey/19169671/, Millennials want to save but can’t. In a survey of 1,001 people, 18-34 years old, Millennials say they do a good job living within their means, yet more than one-third still get financial support from parents, live pay check-to-pay check, and don’t save. In another article, The Wall Street Journal reported that Millennials are saving at a rate of -2 percent.
To be fair, there’s good reason people under 35 feel strapped, including trying to pay off student loans, on average around $30,000. Add the expensive cost of rentals in large urban areas, groceries, health care, credit card and auto loan debt, and you can see why so many people say there’s nothing left at the end of the month.
This is where saving $5s comes in. What if you started using more cash for discretionary spending, if for no other reason than you are motivated to save money and you promised yourself you were going to give it the old college try. I promise, pay for a $3.50 latte with a $10 instead of your debit card, and you’ll get a double rush—the joe and the $5 back as change. Do the same thing when you buy a magazine at the kiosk on your way to work, or at the corner wine shop on your way home. The $5s will add up and with a bit of easy, forced savings, you might even get a more detailed picture of where your discretionary income goes. Might you buy the bottle of wine that costs $11.99, instead of the one for $16.99 just to get a $5 back if you paid with a $20? And what would be wrong about making a more frugal choice and foregoing a little luxury now and then?
I’m not asking you to cut up all your plastic, although the time I did it more than 20 years ago, my husband and I were burdened by credit card debt. We have some cards again today, which we use for big purchases, like appliances and airline tickets. But here’s the difference. We now pay the balances off every month, have no credit card debt, and since we use a lot of cash for discretionary spending, have saved more than $35,000 just in $5 bills.
Talk to me, Millennials. Are you making ends meet? Are you saving any money? Are you willing to take one tiny step forward by using a bit more cash and saving every $5 bill you get in return? Leave a comment and get the discussion going.
Happy Monday. Wishing everyone a great week.
Yours in fives,