Living in Vancouver as a young adult can be challenging. This is true not only for people who have moved here on their own, but also for those who have grown up here with the help of their families. People come from such a wide range of financial backgrounds that determining how much you have saved for yourself can be difficult.
This is a critical question, especially after Covid 19 revealed how bad society’s finances are overall. As a general rule, by the age of 30, you should try to have 50% of your annual income in assets. For example, if someone earns $80,000 per year, they should have saved between $40,000 and $50,000 by the age of 30.
How Much Should I Have Saved By 30 in Vancouver?
You should have $50,000 saved by the age of 30 if you live in Vancouver. Of course, it’s difficult to provide a definitive answer because everyone’s needs differ. For example, if you want to buy a home in Vancouver and save up for a down payment, a one-bedroom apartment would require $100,000. A down payment is typically the largest lump sum goal a young person would want by the age of 30. If you don’t have that goal, a good starting point would be to save 50% of your annual income by the time you’re 30. For example, if you earn $80,000, you should have $40,000 saved.
11 Ways To Save For Your 30’s in Vancouver
Developing a savings culture before the age of 30 is now being encouraged. Covid 19 demonstrated that anything can occur at any time and that no one is too young to save. Even if you don’t have a financial plan, try to save as much as you can because it’s the key to securing your future. Here are some ideas for saving for 30:
1. Consider paying off high-interest debts as an investment
Most people don’t want to be in debt, but most of them are. You might have debts like student loans and credit card debts in your 30s. High interest rates make it hard to pay off loans on time. But if you focus on paying off the debt with the highest interest rate first, you save more money. You can read more about the avalanche strategy of debt management to learn more about this plan.
2. Have an emergency fund
Building an emergency fund is a good way to get into the habit of saving. You can use emergency funds to pay for unexpected costs without having to take money from your other savings or investments. To build an emergency fund, you’ll have to set aside some of your income, which is the same as saving money somewhere for when you might need it. This emergency fund also keeps your other savings safe in case you need to use them to pay for something.
3. Automate your savings
With automated savings, you can set up direct deposits to be made into your savings account at certain times. You will choose how much to save, and once you turn it on, you will see your savings accumulate overtime. It’s a great way to start saving early in life. You will not have to keep racking your brain for when you have to save or are tempted to miss this current month’s savings commitment.
4. Have a budget
This is a tried-and-true way to teach people to save money. A budget will give you the self-control you need to reach your financial goals. With a budget, you can keep track of your money and stop spending on whims. For a realistic budget, you can keep track of how much you spend each week or month. Sticking to your budget is important. You have to be deliberate about how you save, and making a budget is one way to do that.
5. Cut your spending
For your savings plan to work, you must separate what you need from what you want and stick to those. Cut back on travel, shopping on the spur of the moment, eating out, and other things that cost you extra money. Put this money toward building an emergency fund and other investment goals. You can spend less on things like utilities, energy, taxes, food and groceries, car costs, and credit card fees. The extra money you get from cutting down can go into your savings plan.
6. Insurance policies
This is another way to save diligently before you turn 30. You can buy insurance like disability insurance and critical illness insurance. This makes sure that you are taken care of if unplanned health conditions occur. It’s a way to protect yourself from a rainy day and keep your investment fund safe.
7. Save more as you earn more
At this age, you still have lots of energy and can work multiple jobs to make money. Do not see this as a chance to spend a lot of money. Instead, think of it as a chance to save more money before you turn 30. Use your youth to set yourself up for the future. Now is not the time to spend a lot of money and forget that you need to plan for the future. At this point in your life, your income should grow faster than your expenses.
8. Open high-interest savings account
This goes with your plan to save money automatically. You can set up a high-interest savings plan that works on its own. This will ensure your money grows at a higher rate as against the regular savings accounts. You are not only saving money, but also making money at this rate. Every young person should think about doing this.
9. Understand the concept of cash flow
At this point, you probably don’t know a lot about money, which is normal for people in their 20s. You can, however, be smart and start learning more about money. You can start by learning about the concept of cash flow. This will help you figure out how to visualize a budget. It shows you where money comes from and where it goes. It allows you to streamline your expenses and make wise financial decisions. Knowledge is power.
10. Start now
Do not think that you are still young and have a lot of time to prepare. Time flies and you may end up regretting it. Things happen, and your income can fluctuate. If you haven’t made it a habit to save, you may live from paycheck to paycheck without a clear plan for the future. Be intentional about your money and start saving now.
11. Review your progress
This is important if you want to stay on track. Once you have a plan for saving, you can set up a monthly check-in to see how close you are to reaching your goal. It also helps you change your strategy if it doesn’t align with your financial goals.
Most 30 year olds in Vancouver have less than $5,000 savings. It’s an unfortunate reality caused by low wages, high cost of living, and the spending culture of Vancouver.
You should aim to have $50,000 saved by the time you turn 30 in Vancouver