1. Use the 50/30/20 Budget Rule

The 50/30/20 budget rule is one of the easiest ways to structure your budget without having to track every little expense. Here’s how it works: you divide your monthly after-tax income into three simple categories:

• 50% for needs – This includes rent, utilities, groceries, transportation, and other essentials.
• 30% for wants – This covers non-essentials such as dining out, entertainment, and hobbies.
• 20% for savings and debt repayment – This portion goes toward paying off debt, building an emergency fund, or contributing to investments.

This budget system is great for Millennials and Gen Z because it’s flexible yet simple enough to follow without needing constant adjustments. The key is to be consistent and disciplined in sticking to these percentages.

If you find yourself overspending in one category, like wants, try to adjust your spending in the other categories to compensate. This rule helps ensure that you’re not neglecting savings, even when money is tight.

2. Track Every Dollar with Budgeting Apps

It’s easy to lose track of where your money is going, especially with the convenience of credit cards, contactless payments, and subscription services. That’s where budgeting apps come in. Apps like You Need a Budget (YNAB), Mint, and EveryDollar allow you to see all your income, expenses, and savings goals in one place.

These apps can help you set limits for various spending categories, alert you when you’re close to reaching your limits, and even give you insights into your spending habits over time. Some apps can also link directly to your bank account, which makes it even easier to automatically track expenses without manual entry.

For Gen Z, who have grown up in the digital age, using these apps comes naturally and offers an intuitive way to stay on top of finances. Millennials, balancing more responsibilities, can benefit from the time savings and detailed insights these apps provide.

Tracking your spending is the first step toward identifying areas where you can save. For example, if you notice you’re spending too much on takeout, you can start meal-prepping to cut down on that cost.

3. Automate Your Savings

Saving money doesn’t have to be something you actively think about. You can automate your savings, so it happens in the background without any effort on your part. Most banks allow you to set up automatic transfers from your checking account to a savings account on a weekly or monthly basis. Apps like Qapital also allow you to automate savings based on customizable rules—like rounding up your purchases and saving the change.

This strategy is highly effective because it follows the principle of “paying yourself first.” When your savings contributions are automated, you won’t be tempted to spend that money, and over time, it adds up without you even noticing.

For example, if you set up an automatic transfer of just $50 a week to your savings account, you’ll have $2,600 saved by the end of the year—without even thinking about it!

Automating your savings works particularly well when you’re saving for specific goals, like building an emergency fund, going on a vacation, or making a big purchase. Knowing that your savings are growing consistently can help reduce financial stress and give you peace of mind.

4. Implement the “Cash Envelope” Method

If you have trouble staying within your budget, the cash envelope method can be a lifesaver. This old-school system works by assigning cash to different spending categories. Each category, like groceries, dining out, or entertainment, gets its own envelope filled with cash. Once the cash is gone, you’re done spending in that category for the month.

Why does this work? Psychologically, it’s harder to part with cash than it is to swipe a card. Plus, when you see the physical cash dwindling, you’ll be more conscious of your spending and make better decisions. You’re also less likely to overspend if you have a clear, visual reminder of your limits.

Many young adults prefer digital transactions, but if you tend to overspend, forcing yourself to use cash for certain expenses can help curb bad habits. Start by identifying categories where you’re likely to overspend, like dining out or entertainment, and use the envelope method for those categories.

5. Set Clear Financial Goals

Setting specific financial goals is crucial for staying motivated and keeping your budget on track. Whether you’re saving for a vacation, buying your first home, or paying off student loans, having clear goals helps guide your financial decisions.

Start by creating SMART goals—Specific, Measurable, Achievable, Relevant, and Time-bound. For example, instead of saying, “I want to save money,” you could say, “I want to save $5,000 for a vacation by the end of the year.” This is specific, measurable, and gives you a clear deadline to work towards.

Financial goals can also help you stay disciplined. When you’re tempted to make a spontaneous purchase, you can remind yourself of your goal and decide if that purchase is worth delaying your progress.

Break larger goals into smaller, more manageable steps. For example, if your goal is to pay off $10,000 of credit card debt in a year, break it down into a monthly goal of $833. By focusing on the smaller steps, you’ll feel less overwhelmed and more in control of your progress.

6. Avoid Lifestyle Inflation

As you earn more money, it’s natural to want to improve your lifestyle. You might want to upgrade your apartment, buy a new car, or spend more on eating out. However, this is what’s known as lifestyle inflation, and it can prevent you from building long-term wealth.

Lifestyle inflation happens when your spending increases in tandem with your income. While it’s fine to enjoy some of your extra income, it’s important not to let your spending grow so much that it eats up all your potential savings. If you consistently upgrade your lifestyle whenever you get a raise or bonus, you’ll never be able to get ahead financially.

Instead, consider keeping your lifestyle the same, even as your income grows. Use the extra money to increase your savings, invest in the stock market, or pay off debt. Over time, this strategy will help you build wealth and give you financial freedom.

For example, if you receive a raise of $5,000, try to put at least 50% of that raise into savings or investments. You can still enjoy the other half, but this way, you’re ensuring that your long-term financial health remains a priority.

7. Cancel Unused Subscriptions

Many of us are guilty of paying for subscriptions we barely use. Whether it’s streaming services, gym memberships, or delivery apps, these recurring charges can add up quickly. One of the easiest ways to free up money in your budget is to cancel any unused or underused subscriptions.

Start by reviewing your bank statements and listing all the subscriptions you’re currently paying for. Ask yourself if you’re really getting your money’s worth from each one. If not, cancel it! Many services, like Netflix or Hulu, allow you to pause your subscription, so you’re not locked into paying for something you’re not using.

There are also apps like Truebill that can help you find and cancel subscriptions you may have forgotten about. For Millennials and Gen Z who often juggle multiple streaming platforms, gaming subscriptions, and other services, this simple step can make a big difference in your monthly budget.

8. Embrace DIY and Second-Hand Shopping

One of the best ways to save money is to shop smart by buying second-hand items or taking on DIY projects. Thrift stores, online marketplaces like Depop, and local Facebook groups can be treasure troves for high-quality items at a fraction of the retail price.

Second-hand shopping not only saves you money, but it’s also more sustainable. By choosing gently used clothing, furniture, or electronics, you’re reducing waste and getting more value for your money.

For Millennials and Gen Z, who are increasingly concerned about environmental impact, thrifting or upcycling can also be a way to express creativity. Instead of buying new furniture, you might find an old piece at a flea market and give it a fresh coat of paint. You can also DIY small home improvements, gifts, or decorations instead of spending money on new items.

Whether it’s for clothes, home goods, or even electronics, buying second-hand and embracing DIY can save you hundreds (or even thousands) of dollars each year.

9. Limit Eating Out

Eating out is a major budget buster for many young adults. The convenience of grabbing a meal from your favorite restaurant or ordering takeout can add up quickly. One of the easiest ways to save money is to limit how often you eat out and start cooking more at home.

Meal prepping is a great strategy to help you avoid the temptation of takeout. By preparing meals in advance, you can ensure you always have something ready to eat, even on busy days. Plus, cooking at home is almost always cheaper than dining out, and it’s often healthier too.

If you find that cooking every meal from scratch is too time-consuming, start small. Try making a couple of meals at home each week and gradually build up from there. You don’t need to become a master chef overnight—simple, budget-friendly recipes can still be delicious and nutritious.

You can also save money by making small changes, like packing a lunch instead of buying food at work or school. Over time, these little changes can result in significant savings.

10. Review and Adjust Your Budget Regularly

A budget isn’t something you set and forget. Life changes—so should your budget. As your income, expenses, and financial goals evolve, it’s important to review your budget regularly to make sure it still fits your current situation.

Set aside time at the end of each month to review your spending and savings. Did you overspend in one category? Can you adjust your budget to make room for unexpected expenses? Maybe you paid off a debt and can now redirect those funds toward savings or investments.

Regularly reviewing your budget also allows you to track your progress toward your financial goals. If you find that you’re falling short of your savings target, you can identify areas to cut back and make the necessary adjustments. Conversely, if you’re doing well, you might reward yourself with a small treat or reallocate extra funds toward something important.

Think of your budget as a living document—one that grows and changes as your financial situation does.