The 10 best US cities for millennials to save money
It isn't always easy to save money, especially if you're a millennial. Young people must juggle stagnant or sinking wages with the higher costs of significant expenses like college tuition , student loans and housing prices .
If you're looking to set aside more money, according to a new study from Bankrate, there's one major factor that could determine how easy, or how hard, it is for you to save: your location. Based on its data, here are the top 10 U.S. metro areas where it's easiest to save money, and where your savings would go the furthest.
Kansas City (covers parts of Missouri and Kansas)
Annual saving potential: $12,191
Six-month emergency fund: $19,443
Percentage of savings goal achieved: 63
Cincinnati (covers parts of Ohio, Kentucky and Indiana)
Annual saving potential: $11,231
Six-month emergency fund: $19,897
Percentage of savings goal achieved: 56
Memphis (cover parts of Tennessee, Mississippi and Arkansas)
Annual saving potential: $9,348
Six-month emergency fund: $16,638
Percentage of savings goal achieved: 56
Columbus, Ohio
Annual saving potential: $10,431
Six-month emergency fund: $20,255
Percentage of savings goal achieved: 52
St. Louis (covers parts of Missouri and Illinois)
Annual saving potential: $10,054
Six-month emergency fund: $19,570
Percentage of savings goal achieved: 51
Baltimore-Columbia-Towson, Maryland
Annual saving potential: $13,127
Six-month emergency fund: $25,584
Percentage of savings goal achieved: 51
Pittsburgh, Pennsylvania
Annual saving potential: $8,894
Six-month emergency fund: $18,485
Percentage of savings goal achieved: 48
Indianapolis-Carmel-Anderson, Indiana
Annual saving potential: $8,789
Six-month emergency fund: $18,561
Percentage of savings goal achieved: 47
Raleigh, North Carolina
Annual saving potential: $10,675
Six-month emergency fund: $23,822
Percentage of savings goal achieved: 45
Oklahoma City, Oklahoma
Annual saving potential: $7,787
Six-month emergency fund: $18,203
Percentage of savings goal achieved: 43
To determine where it's easiest to save, the researchers used a three-step approach. First, they figured out how much you'd need in an emergency fund that could cover six months of expenses, using the cost of necessities like mortgage payments, groceries, various insurances and among other expenses.
Second, they took the average after-tax earnings of residents of each city and subtracted estimated annual essential expenses to get the "annual saving potential." So, your annual saving potential is your net annual income minus the annual expenses you can't live without.
Third, the researchers looked at how far your saving potential could get you to achieving your emergency fund goal. "The higher the percentage," says Bankrate, "the easier it is to save."
Some millennials are managing to put money away. A 2018 Bank of America survey found that one in six millennials now have $100,000 or more in savings . However, most young people have far less than that. The financial website GOBankingRates found that 67 percent of them have less than $1,000 in saved and 46 percent have nothing saved at all. Well over half would struggle to cover the cost of an emergency .
According to former CNBC host, best-selling and financial advisor Suze Orman, you should aim to have at least six, and ideally eight to 12, months of savings in an emergency fund to cover unexpected expenses. Other experts recommend saving 25 percent of your overall gross pay in your 20s, having saved the equivalent of your annual salary by age 30 and having saved about twice your annual salary by age 35.
The first step to increase your savings is to set a savings goal, says Bankrate, "but be realistic. You're not going to hit, say, $25,000 in one year, or even two. It'll take years to reach your goal." So set up a manageable system to help get you there. "Dedicate 5 to 10 percent of each paycheck to a high-yielding savings account . Look to cut down on your biggest costs ," and be aware of how you're spending your money.
Here are some more tips to help you get started.
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