Money Tips for Millennials
Budgeting for millennials is definitely not the easiest project to conquer. It’s hard not to be overwhelmed by finances, but your 20s are the best time to figure out. As you age, it seems to get more overwhelming because there’s much more pressure to have it all together. It’s also the best time to make mistakes because you still have plenty of time to recover before retirement. If you’re well into your 30s then don’t freak out. You still have time, but it’s time to get focused and Create a budget!
It’s easy to be overwhelmed with such long term topics, but with these simple steps you can be well on your way to making smarter financial choices.
A good budget will help you accomplish three things:
- Accommodate your lifestyle.
- Give you A debt-repayment strategy.
- Provide savings goals that include growing your emergency fund and planning for retirement.
Look at Your Income
This is where we need to start when budgeting for millennials because ultimately it decides everything else. We need to make decision based on our take home pay, instead of gross income (pre-taxes). I know that penny pinching and going without can make life seem rather bland, but we have to do what we have to do. I live in Oklahoma where everything is rather cheap, but I still make less than $25k a year. There are times that I would really like to splurge on a new outfit or a new trendy thing, but the reality is that I can’t. Despite my low income, I did manage to save up enough to buy a house and fix it up quite a bit. You can do it too, but it takes some serious dedication and knowing your priorities.
Look at What’s Going Out
This is a can of worms no one wants to open, but we have to. It’s like looking at our report card. Online banking options make it pretty easy to do, so just
- Find your balance at the beginning of the month
- Look at deposits (how much money entered your account that month)
- Look at withdrawals (how much money exited your account, especially when it comes to bill, loan payments etc. Break it down into fixed expenses that never change and variable expenses that fluctuate from month to month)
- Then finally look at the balance at close of month: Beginning month balance plus Deposits minus Withdrawals
You’ll want to look at the past few months to get an overall view of your spending habits.
Identify Patterns
Credit cards make it pretty easy to spend without thinking too much about it. Take inventory on what you spend the money on and find ways to spend less in that category. Either find cheaper sources or even cut down on the amounts that you purchase. You can also use a daily tracker or at least with Discover, you can see a chart of where you spend the most. You can also use an app to input all your receipts. This might be helpful, if you hate being inconvenienced. Less purchases means less receipts, eh?
Write Down Your Financial Goals
What do you actually want from your money in the future? Do you want to own property, travel to a particular place, save for having a baby, save for your retirement, be debt-free, or something else? Writing down any kind of goals is an important step to accomplishing them. You can keep them in your wallet or in your car as a reminder when you’re tempted to buy something not in line with your goals. If you want to learn about these silver and gold investments, you better check out the lexi capital webpage for info. And when you’re ready to buy or sell gold jewelry, you may contact these scrap gold buyers Adelaide.
Open a Savings Account
As long as you have 5 cents to spare, having a savings account is a must. It makes it much easier to see what money you have actually saved and when you need to up your savings game. You can open a savings account through your bank, but the average bank has low interest rates even for long-term CDs. I opened a savings account through Discover and the interest rate was 3xs higher than my basic CD rate from my bank. I recommend opening a savings account in a separate location because it makes it easier to put money aside and forget about it. You can also set it up, so it automatically transfers money after each paycheck. If you’re a parent, then you should also consider setting up a Junior ISA for your kids at The Children’s ISA. You can visit their website if you want to find answers on frequently asked questions on children’s ISAs.
These are basic tips, but since I’ve mentioned it, certificate of deposit (CD) is a time deposit, a financial product commonly sold by financial institutions. CDs are similar to savings accounts, but you put in a minimum amount, usually $1,000-$3,000 for a time. There is a penalty to withdraw the money early in that they are insured “money in the bank” and thus virtually risk free. I also have a CD through Discover with a much higher interest rate than I earned at my bank.
If really all you have is spare change left at the end of the month, then micro-investing apps could be helpful. “Spare change’ investment apps clearly have the potential to be useful for beginner investors or even college students who have a limited income and want to avoid complex processes and services. However, once your account reaches $5,000, then higher fees become an issue so you might want to reevaluate when you get to that point.
Make Saving Automatic
Most online bank app allow you set up automatic saving deposits for any amount. Use those to your advantage, set it up and forget all about it. This also kind of tricks you into thinking you have less money to actually spend. It makes saving the first priority instead of just an option.
Follow the 50-30-20 Budget Rule
For most people I know, this can be difficult because they simply don’t make enough money to divide their finances like this, especially when it comes to housing. However, I’ll still share it because it’s a good rule of thumb. Ideally, 50 percent of income goes to necessities such as housing, insurance, etc., 20 percent goes into long term savings or paying off debts, and 30 percent to lifestyle choices, such as eating out, entertainment, etc. Divided up that way, things become a bit clearer and you can see how your spending in each category look. If you need affordable insurance coverage, make sure to click here for more info.
Use Cash for Problem Areas
This is a trick I’ve started using and it’s really become quite helpful. When I changed jobs last year, it was more difficult for me to stick to a budget. If I had a tough day, I would reward myself with an extra meal out or buying something I didn’t quite need. A tougher job didn’t necessarily mean I made more money, so I had to find ways to reign it in. Sometimes it would get so bad that I would leave my credit cards at home, but it helped tremendously to keep me on budget.
The envelope system is a great way to stay organized if you have multiple areas that require cash. The envelope budgeting system divides your income into different spending categories—bills, groceries, gas, and so on. Once you’ve decided how much you should spend on each category, you’ll take that amount in cash and place it into an envelope.
Get Updated Quotes on Services
I had a certain car insurance when I started driving, but it just kept going up and up and up, through no fault of my own. I’d like to think I’m a pretty loyal person, so I just kept hanging in there. Well, when I had to add house insurance, they wouldn’t insure my house. I had to do some shopping and I ended up paying just a little more with a car and a house when I switched. I was AMAZED. If it’s been awhile since you’ve been shopping for anything like insurance, cable, internet, etc take some time to see what options you have. You can also call and ask what deals they’re offering for long standing customers that pay their bills on time.
Check Your Credit Score
This various ways to accomplish this. Sometimes this is a free service offered through credit card companies. People always dread looking at their credit score, but it’s necessary in all kinds of life events, such as getting a new credit card, renting a car, renting apartment, and getting a loan. It’s important to know what these places will find. You don’t want any surprises. Also, sometimes there are errors on credit reports that will bring down your score. It’s important to find these errors and get them fixed. Higher credit ratings often translate to lower interest rates for loans.
The good news is that apps like Mint and Credit Karma offers your credit scores for free.
Start Consolidating Debt
This step is an important step to making debt more manageable. The benefits are lower payments and the ability to save more money each month. Credit card and other loan companies are ruthless when it comes collecting interest. A debt consolidation company will have a much lower interest rate and simplify the payment process. You can also look at paying off debts with the highest interest rate first. Or try the opposite approach with “snowballing”. You can make minimum payments on all loans, except the smallest one, for which you’ll devote most money to it that you can until you pay it off. Then devote more resources to the next smallest one until it’s paid off, etc.
It’s important to remember to keep your card accounts open. An important part of your credit health is determined with the length of your credit history.
Stop Paying for Things You Don’t Need or Use
Take note all your recurring expenses. Do you have any payments not being put to good use? Subscriptions can take a big chunk of a budget and sometimes our needs or wants change and we don’t update the companies. You can also download an app to track your money to see where it goes? Consider each item and make sure your future self will be better off with those products or services still in your life now.
Sell Your Old Stuff
Again, all that stuff sitting around the house not being used is potential meal tickets. Not only does cleaning out stuff you don’t use help simplify your life, it also can help you make or save money. Sell your unwanted and old gold jewelry to a gold buyer such as the ones at https://alliancegoldandsilver.com/what-we-buy/.
Budgeting for millennials is definitely not the easiest project to conquer, but with a little planning and focus you can get control of your finances and your future!
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