Adulting? In this economy? It can be hard for Gen Z. You had to go through a pandemic while finishing school, and now, here you are, thrown into the “new normal” of the real world. At a time when prices are rising due to inflation, getting your first few tastes of adult responsibilities can be overwhelming.
Saving money could be the best adult thing you can do right now. We know – you already spend so much on transportation, food, utilities, or even rent. On top of all that, there are also so many difficulties and uncertainties in the world. But all of these are compelling reasons to start building a nest egg.
Being young and saving money may seem like opposing ideas to some. Youth is all about enjoying the moment, YOLO, and splurging on something after working hard because it feels so rewarding and you dasurv it. Saving, on the other hand, is all about the future, which looks far away when you’re still in your 20s.
But soon enough, the future will inevitably become your present, and it’s better to get there well-prepared instead of lacking resources. As you get older, you will have bigger dreams, responsibilities, and needs. The journey to greater things begins now, whether you like it or not.
Saving money in your 20s is a smart move. Getting that head start to a better financial future can only be beneficial in the long term. Ask anyone in their 30s or 40s – your brothers, sisters, titos, or titas – what their biggest regrets are. Many would say they wish they invested in a condo unit or land when they were younger because they would've been multi-millionaires now.
No, you don't necessarily need to invest in real estate now. There are many other investment products available in banks that offer the same benefit of compounding interest. And the younger you are, the more you’ll enjoy the effects.
The money you invest will earn interest, which means it will grow. From that new, compounded figure, you earn more because the new rate is being multiplied by a higher figure. So, your money grows exponentially, and the process goes on until your funds mature or whenever you feel like you’ve earned enough.
Simply put, your exponential earnings would be greater if you start saving in your 20s versus your 30s, or worse, your 40s. So, the question shouldn’t be “Is it too early to start saving money?” It should be, “How many more years of compounded interest am I missing by waiting too long?” Start saving now and avoid the financial FOMO!
Gen Z has different priorities in life. In a survey conducted by Rappler, most middle-class Gen Z respondents do not consider work their number one priority, preferring personal relationships and commitments. It means young professionals today put more value on the ability to enjoy life and spend time with friends and loved ones.
It also gives them even more reasons to save money. Devoting extra time to the people you love and your passions and interests is a more compelling impetus to have long-term financial stability. Young professionals are equipped to do this. Work may no longer be their top priority, but their generation is proving to be as hardworking as any other.
Deloitte’s 2022 Gen Z and Millennial Survey reveals that 61% of Filipino millennials and 63% of Gen Zs have taken on either a part-time or full-time paying job on top of their primary job. It is significantly higher than the global average. With so many young Pinoys hustling, there should also be a lot of them saving.
There are many reasons people in their 20s should save money. They value many things in life outside of their careers, and these interests and needs motivate them to save up immediately and for the future.
1. Travel
Everyone should be able to satisfy their #wanderlust once in a while. But let’s face it, traveling the country or the world can be expensive and to get the most out of your miles, better plan and save for months or even years in advance. Set aside some funds for your next travel destination and let it grow by using the best savings or investment products for your lifestyle.
2. Education
Because of Gen Z's and millennials’ fondness for part-time work and side hustles, multi-tasking has become their most important skill, especially in the post-pandemic job market. Further education can help young people expand their skills whether through post-graduate programs or short courses. Depending on the length or demand for the course, you may need to have some savings to pay for your further education.
3. Retirement
Retirement might not be on your mind when in your 20s. After all, life post-retirement is virtually unimaginable when your career has just begun. But delaying makes saving for your golden years only harder.
Because of compounding interest, saving for retirement early means you have a better chance of growing the funds you will need after your career ends. It will also make it easier to dictate when to call it quits. If you’ve decided you have saved enough, you can retire early and enjoy more freedom for the rest of your life.
You also have the flexibility of setting aside a smaller amount. Saving for retirement in your 20s gives you a longer head start, allowing you to devote a more affordable amount than you would need to if started later.
4. Emergency funds
Starting your career while receiving new responsibilities can be daunting. Most of the time, just being able to pay all your bills while maintaining your desired lifestyle already feels like a win. But emergencies happen and, by definition, you’ll never know when you will need the money to pay for them.
Whether for yourself or your family members, having emergency funds readily available will always be a smart move. You should consider setting aside money (about 3-6 months’ worth of living expenses) or even having a medical or insurance plan that’s workable for you.
There are many ways to save money. Banks offer different options on how to save or invest money. These are tailor-made to people’s needs, financial capabilities, long-term goals, and risk appetite.
1. Savings account
This is a must-have for those who are just starting to earn income regularly. Putting your hard-earned money in a savings account can only earn a small interest (most banks offer 0.10%-0.25% annual interest) but it gives you a secure fund source that you can withdraw from any time. Some banks even offer higher interest rates for higher account balances, which incentivizes people who save a larger amount of their income.
2. Term deposits
Want to earn more savings through higher interest rates? Then, term deposits could be for you. Term or “time” deposits allow you to earn more interest the longer the bank holds your money.
For example, Chinabank offers three kinds of term deposits: Regular Time Deposit, Diamond Savings, and Money Lift Plus. The minimum placement for a Regular Time Deposit and Diamond Savings is P5,000 for a minimum tenor of 90 days. For the latter, a 30-day tenor is available for a minimum placement of P50,000. Money Lift Plus, on the other hand, is a longer-term deposit with a five-year-and-one-day minimum and at least a P50,000 placement.
3. Unit Investment Trust Funds
If you're looking to invest your money but don't have the time or expertise to play the markets, you can consider Unit investment Trust Funds or UITFs offered by banks. These are funds pooled from various investors and managed by professional fund managers to maximize returns and balance the risks.
UITFs have enough variety to cater to different types of investors, from conservative to aggressive. They provide retail investors access to high-grade investment securities despite a small capital. In Chinabank, specifically, the minimum outlay is P5,000 for the peso-denominated UITFs and $500 for the dollar variants. Chinabank also makes the process more convenient thanks to its Systematic Investment Plan (SIP). This lets you top up your investment affordably and provides flexible registration options, allowing you to choose your UITF type, subscription amount, duration, and more. Depending on your needs, you can hold your money for years or redeem it in a few months.
At the end of the day, how you handle your hard-earned money is all up to you. Life in your 20s is all about choices and the exciting journey of making them. Saving while still young will give you more options when you grow older, at which point, it may be too late or at least harder to start saving and investing.
Overwhelmed by all the options in front of you? Chinabank offers simple savings and investment choices that can guide you in your journey through adulthood. Check out the different products that can help you get started, whatever your needs or goals may be.
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