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Building the habit matters more than the amount

Why should I put ten euros a month into savings if I only end up with just over a hundred euros after a year? Many young people struggling with limited income might ask the same question, even though saving is relatively common among young adults these days. 

But saving is about more than just amounts and quick returns, says Lauri Nummenmaa. You need to learn both on a cognitive level and on an emotional level, and the true value of saving lies in adopting these new skills and routines. 

“Even saving what seems like a trivial amount is an important part of learning,” says Nummenmaa. 

Whether you’re starting a new hobby, a new diet or saving, the most important thing is to get started. Over time, regular saving can become a useful routine that you’ll thank yourself for later.  

Lauri Nummenmaa also says that learning to save will help you learn to reflect on your own spending – is there anything you could cut back on? 

“When you save, you learn to recognise things that are valuable to you,” he emphasises.  

Would coffee with friends bring more joy than a new piece of clothing you might not even need? 

Lauri Nummenmaa

Lauri Nummenmaa - Small

Lauri Nummenmaa is an internationally respected neuroscientist and psychologist who has worked as a professor at many universities, including the University of Turku and Aalto University. He has studied brain mechanisms that support emotions, and also written about how emotions affect financial decision-making.

Do the general savings rules also apply to young people?

You may have heard that everyone should save at least 5% of their net income, or that you should have an emergency fund equal to two or three months’ net salary.  

These are general rules of thumb for saving, but do they suit young adults who don’t yet have a regular income?  

“On average, the rules of thumb work well, but everyone’s financial ability to save is different,” says Lauri Nummenmaa. 

For most young adults, these rules of thumb can work, but you can also freely adapt them to your own financial circumstances. 

If you can afford to save just 2% of your net income, it’s perfectly fine – as long as you set it as a rule. If you work in the summer, for example, and have a higher income, you can set aside more, even 10%. 

You can initially aim at building an emergency fund that equals your one month’s net salary. 

“When life surprises you, the money you have saved yourself is always the cheapest option to fall back on,” says Lauri Nummenmaa.  

Illness, unemployment or an unusually large electricity bill are examples of situations when you need an emergency fund. These are also the risks for which the general savings rules have been created. 

Many young adults have to cope with a lot of uncertainty in life, but uncertainty is not a good reason to postpone starting to save.  

“Saving is one of the best cognitive tools for managing uncertainty,” Lauri Nummenmaa summarises. 

About 50% save even with a smaller income

We examined the saving habits of 18 to 30-year-old Finns: 

  • Most young adults save – as many as 69% save every now and then or regularly. 
  • Focus on short-term goals – young adults often save money for travelling and holidays (48%) as well as for leisure products and hobbies (38%). 
  • Many save even with a smaller income – 49% save at least a small amount of money even if they don’t have much money left over for saving. 

Read more about saving habits of young adults

How to save regularly – even with a small or irregular income

When your income is small or irregular, saving requires a bit more planning than usual. The more your income varies, the greater the need to build a financial buffer. 

  • Create a budget. By being aware of your income and expenses, you can best identify how you can save. The tools available in Nordea Mobile will help you track your finances and create budgets. Read more about budgeting
  • Save in step with what you make. Consider saving more during months when your income is higher. Similarly, when you have less income, you can put aside a smaller amount. The most important thing is to do it regularly, even if the amount varies depending on your situation.  
  • Make saving automatic. For example, set up an automatic transfer to your savings account on payday. This makes it easier to turn saving into a routine. When you don’t have to make the transfer yourself every month, you’re less likely to skip saving. Learn about building a buffer. 
  • Ask for help. Letting someone else make the financial decisions for you can help you get started with saving. Our experts are here to support you with saving and investing. Book a meeting.

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