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Do you know where your money's going?

Jump-start a long-term savings habit by finding out now.

Young couple buys a new car.

A recent report has data that suggests young adults are tightening their belts. From 2007 to 2010, those under 35 reduced their debt by 29 percent. And the share of young households holding any debt is currently at 78 percent — the lowest level ever recorded.1

Follow in your peers' frugal footsteps. See how other young people are spending their money, and zero in on expenses that could be keeping you from saving for your future.

See where the money goes.

According to data from the Pew Research Center, these common areas typically make up young adults' total debt:

  • 74 percent — residential property
  • 15 percent — student loans
  • 6 percent — vehicle loans
  • 3 percent — other obligations
  • 2 percent — credit cards

Discretionary spending can empty your wallet.

Forget for the moment your largest debts. It’s the small purchases that can cause the most financial strain, keeping you from paying down debt, building an emergency fund, investing in insurance or saving for retirement. Here are tips for avoiding those nonessential outlays:

  • Consider all the costs. Once you own a car, you'll have to cover the costs of insurance, taxes and maintenance that go along with it. If you have a cell phone, you also may be responsible for the costs of overages, downloads and even Internet usage. These and similar expenses are part of the cost of ownership and are easy to overlook — but they can add up fast.
  • Automate spending carefully. Consider opting out of services that automatically withdraw funds to pay for monthly charges or renewals. This is often the case with gym memberships and online television subscriptions. In many cases, paying as you go can remind you what you’re putting your money toward.
  • Avoid paying for convenience. Taking time to brew your own coffee rather than buying a cup on the way to work can mean considerable savings. So can striking bottled water off your grocery list and drinking tap water (or filtering it at home). Even using your debit card rather than paying a slew of ATM fees can keep more money in your account.

Small savings add up.

Try this: Brown-bag your lunch and divert the $25 you’d otherwise spend each week eating out to your savings. That could give you an extra $100 every month or $1,200 a year.

» See how much more you might save by cutting back on other expenses with our calculator.

And while you're cutting back, never forget what you could be gaining through compounding. A 35-year-old who puts that $1,200 toward a retirement plan with a 7 percent return could amass more than $130,000 before retiring — and that's on top of his regular retirement savings. (Note: The normal retirement age for working adults under 35 is 67 years.)

The assumed rates of return in this example are hypothetical and do not guarantee any future returns nor represent the returns of any particular investment. Amounts shown do not reflect the impact of taxes on pre-tax distributions. Individual taxpayer circumstances may vary. This is for illustrative purposes only.

Sit down with a financial professional to learn ways to help get the most out of your money. And use our savings calculator to see what your savings may be worth.

Get hands-on.

Use our budgeting calculator to track your expenses. Track your spending with the help of our budgeting calculator.


1 Pew Research Center, February 2013; http://www.pewsocialtrends.org/2013/02/21/young-adults-after-the-recession-fewer-homes-fewer-cars-less-debt/1/

Insurance products and plan administrative services are provided by Principal Life Insurance Company. Securities are offered through Princor Financial Services Corporation, 1-800-547-7754, Member SIPC and/or independent broker dealers. Securities sold by a Princor® Registered Representative are offered through Princor. Princor and Principal Life are members of the Principal Financial Group® (The Principal®), Des Moines, IA 50392. Certain investment options may not be available in all states or U.S. commonwealths.

© 2013 Principal Financial Services, Inc.

t13070303u4 – 7/2013

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