How millennials can build up their savings

A young woman leaning against a glass wall

A recent survey from revealed some dim statistics regarding millennials and their savings accounts: The numbers revealed that 50 percent of respondents have less than $1,000 in savings [1].

Millennials - those being between 18 and 34 years old - essentially do not have a financial safety net to turn to during hard times. The lack of such financial security can be especially damaging during times of unemployment or if an emergency expense occurs, such as a hospital visit.

But they aren't the only generation with little to nothing in their savings account. According to Go Banking Rates, 28.4 percent of baby boomers have nothing in their savings account, and the same applies for 30.8 percent of the older segment of generation x [2].

Moving forward, younger individuals have to make a concentrated effort to build up their savings. Here's how they can do it while still enjoying everything life has to offer. The earlier they start to develop good savings habits, the better off they will find themselves in life.

Turn on automatic deposits
Most workplaces allow you to have your paychecks automatically deposited into your preferred checking account. Instead of having your entire check deposited into the checking account, set it up so a small portion is diverted into your savings.

Doing so will benefit you in a few ways. First, you won't have to remember to complete the transaction yourself. By setting the money aside before you even see it, you'll feel less inclined to go out and spend it.

Second, it lets you budget your monthly finances better. Set up the direct deposit for a certain amount and incorporate it your spending plan. After all, you can't spend money you don't have access to.

Set up retirement accounts
Standard savings accounts are not enough to build a strong safety net. While they are still good to have, your money will not grow enough in the coming months due to the still historically low interest rates.

Turn to 401(k) and Roth Individual Retirement Accounts to save for the long term. 401(k) retirement accounts are offered through your employer, and if they offer a match, take full advantage of that. If your employer matches 50 or 100 percent of your contributions, they are essentially giving you free money, and there's no reason to pass that up.

A Roth IRA is another vehicle for retirement that is beneficial because it grows over time and offers generous tax breaks. When you finally reach the age where you can take money from the account, those withdrawals are tax-free. By using a Roth IRA, not only are you saving for the future, but you're also saving in tax breaks.

In an interview with CNBC, Scott Bishop, director of financial planning at STA Wealth, said to keep your investments simple. Aim for a balanced fund or a target-date fund. Doing so will prevent you from feeling overwhelmed and by keeping it simple, your patience will be rewarded.

Know who to seek advice from
Every generation is shaped by the world around them, and for millennials, they have come of age during the economic downturn, and many are still dealing with the effects. It's fair to say that many individuals of this generation do not have high views of the financial system.

However, when it comes to savings and retirement, millennials have to know who to go to when seeking financial advice. Parents and friends have the best intentions in mind, but most likely than not, they do not hold intricate knowledge of the best ways to build a savings.

Millennials need to start building up their savings before it's too late. They have to utilize regular savings accounts and retirement funds to ensure total economic safety.

[1]. The Majority of Millennials Have $1,000 or Less in Savings

[2]. 62% of Americans Have Under $1,000 in Savings, Survey Finds

[3]. 7 ways Millennials can get a jump-start on retirement planning

The information provided in these articles is intended for informational purposes only. It is not to be construed as the opinion of Central Bancompany, Inc., and/or its subsidiaries and does not imply endorsement or support of any of the mentioned information, products, services, or providers. All information presented is without any representation, guaranty, or warranty regarding the accuracy, relevance, or completeness of the information.