A 24-year-old retail worker earning a median salary of $39,104 saved for a home by budgeting 50/30/20, cutting discretionary spending, and leveraging side hustles. Living with roommates and targeting low-cost areas reduced expenses. High-yield savings accounts and first-time homebuyer programs aided the journey. Strategic financial planning and discipline made homeownership achievable despite a modest income.
From Retail Paychecks to Homeownership: A Young Adult’s Journey
The median annual salary for a 24-year-old in the U.S. is $39,104, or about $3,259 monthly before taxes, according to the Bureau of Labor Statistics (BLS). For retail workers, earnings often align with this figure, with retail sales associates averaging $33,900 annually. Despite these modest wages, homeownership is possible with disciplined financial strategies, as demonstrated by a hypothetical 24-year-old’s success story.
Adopting the 50/30/20 Budget Rule
A key strategy for saving on a retail salary is the 50/30/20 budgeting rule, which allocates 50% of income to necessities (housing, utilities, groceries), 30% to wants (dining out, entertainment), and 20% to savings or debt repayment. For a take-home pay of approximately $2,600 after taxes, this means $1,300 for essentials, $780 for discretionary spending, and $520 for savings. By adhering to this, our 24-year-old prioritized savings, setting aside $6,240 annually for a home down payment.
Cutting Costs with Shared Living
Housing costs consume a significant portion of income for young adults, with those under 25 spending about 24% of their pre-tax income on rent. To counter this, living with roommates can slash expenses. For example, splitting a $1,800 monthly rent with two roommates reduces the individual cost to $600. Combined with $150 for groceries and $55 for utilities, this keeps necessities well within the 50% budget, freeing up more for savings.
Boosting Income with Side Hustles
Retail salaries alone often fall short for big goals like homeownership. Side hustles can bridge the gap. Our 24-year-old supplemented their income with a part-time gig, such as tutoring or freelancing, adding $400 monthly ($4,800 annually). According to a 2024 ZipRecruiter analysis, side gigs like these are common among Gen Z, with many earning $200–$500 monthly. This extra income boosted annual savings to over $11,000 when combined with the 20% savings rule.
Leveraging High-Yield Savings Accounts
To maximize savings growth, a high-yield savings account (HYSA) is critical. As of recent data, HYSAs offer annual percentage yields (APYs) of 3.8% or higher, compared to 0.5% for traditional savings accounts. By depositing $11,000 annually into an HYSA with a 3.8% APY, the 24-year-old could earn approximately $418 in interest in the first year, compounding over time to accelerate savings growth.
Targeting Affordable Housing Markets
Location significantly impacts home affordability. The median U.S. home price is around $412,300, per recent National Association of Realtors data, but prices vary widely. In states like West Virginia, median home prices are as low as $200,000, requiring a $40,000 down payment for a 20% conventional loan. By saving $11,000 annually, a 24-year-old could reach this goal in under four years, assuming consistent savings and modest price appreciation.
Utilizing First-Time Homebuyer Programs
Government programs can ease the path to homeownership. FHA loans, for instance, require only 3.5% down ($7,000 for a $200,000 home) and are accessible to those with lower credit scores. Additionally, programs like the USDA loan for rural areas or state-specific grants can reduce upfront costs. Our 24-year-old researched these options, qualifying for an FHA loan to minimize their savings target.
Minimizing Discretionary Spending
Discretionary spending often derails savings goals. The 30% allocated for wants ($780 monthly) was scrutinized, with cuts to non-essentials like frequent dining out or subscriptions. For example, reducing dining expenses from $200 to $100 monthly saved an additional $1,200 annually. Tracking spending weekly, as advised by financial experts, helped identify small leaks, like $50 monthly on snacks, redirecting those funds to savings.
Building an Emergency Fund First
