Fuel Your Freedom: Top 5 Savings Strategies for Young Working Professionals

But with inflation and urbanisation,  it is easier said than done. Uncover the top 5 savings strategies for young working professionals, from automated savings to emergency funds.

Quick Summary 

• Automated Savings: Separates your savings and disposable income. 

• 50/30/20 Rule: Income split for better budgeting.

• Emergency Fund: Ensures that you have a cushion to fall back on, in case of any emergencies. 

• Setting Long Term Goals: Helps to build the habit of saving.

• Incremental Savings:  Gradually increasing your savings amount by 1% over time. 

Why Saving Early Matters 

Starting early fosters good financial habits and allows your funds to expand over time. It protects you from emergencies, helps support short-term ambitions, and puts you ahead of your contemporaries who wait to "earn more" before saving. Small amounts saved on a regular basis can add up over time.

Top 5 Savings Strategies for Young Working Professionals 

1. Automate Your Savings

Automating your savings is extremely helpful as it separates your savings and disposable income. To get started, set up automatic transfers to your recurring deposits. 

2. Use the 50/30/20 Rule for Budgeting 

The 50/30/20 rule is one of the fundamental concepts in budgeting. As per the rule, you should split your income into 50% [needs]; 30% [wants] and 20% [savings]. 

3. Build an Emergency Fund 

Building an emergency fund ensures that you have a cushion to fall back on, in case of any emergencies. To create one, set aside 3-6 months of critical costs in a separate account for emergencies.   

4. Set Long Term Goals 

Setting long term goals motivates you to start financial planning. It also helps to build the habit of saving. Some  examples of long term goals include buying a car and retirement. 

5. Use the Incremental Saving Method 

The Incremental Saving Method, also called the 1% Saving Method is all about gradually increasing your savings amount over time. Begin by saving 1% of your income and progressively increasing it by 1% each time.