When it comes to ensuring you’ve got a comfortable financial future, preparing in your twenties will pay off. The results will be worth the effort you put in, and will have a higher impact the earlier you start. Educate yourself on money-smart strategies and implement them while you have fewer financial responsibilities, so that when you’re considering big commitments like buying a home, you’ll be in the best possible place financially.
1. Start Budgeting
You don’t have to track every single penny you spend, but you should know how much of your paycheck you’re willing to part with each week and stick to that number. Start by looking at how much you need for the essentials, things like food, rent, and bills.
From that point, look into how much you need to budget for other predictable costs, like student loans and car payments. After you’ve got the payments that you’re already committed to covered, turn your attention to the remaining funds and set a limit on how much you’re willing to spend on other activities, as well as a minimum of how much you’re going to save each paycheck. Stick to the same plan every week and you’ll notice as your finances start to become more predictable.
2. Change How You Think About Savings
An important part of managing your finances is savings. After being a broke college student for years or depending on family financially, it may take some shifting gears to figure out what to do when that first paycheck lands in your account.
Even if you’re not ready to plunge into how to invest your money, make sure that a set amount of your income is being saved every month, so that when you need to buy a new car or run into unpredictable health circumstances, you’ll won’t have to scramble or go into debt.
3. Avoid Debt
The attractiveness, availability, and convenience of credit cards make it more difficult to stick to a budget and have a firm grasp on how much money you’re spending, particularly with small purchases that accumulate, such as going out for lunch.
Many millenials are struggling under a mountain of debt. Bills, interest, and late fees from credit cards aren’t things you don’t want to pile up, and debt can do some serious damage to your credit score. Limit yourself to only a couple of cards that you can actively manage, and if you have trouble tracking your spending, paying in cash might help you spend more consciously. Set up your payment plan to cover at least the minimum due every month, to avoid late fees.
4. Educate Yourself About Your Student Loans
If you have student loans, you probably applied for them years ago at this point. Take the time to do some research, relearning everything you can about what types of loans you have and how different payment plans might vary. By knowing which loans have the highest and lowest interest rates, you can form a better strategy to pay them off in the most efficient manner.
5. Make Technology Your CFO
If there’s one thing millenials can leverage financially, it’s using apps to get things done. There are tons of awesome apps that make it super easy to monitor your financials on the go. Whether it’s tracking your budget, alerting you of overspending, or updating you on changes in your investments, these tools make it easier than ever to be financially conscious.
A few cool budgeting apps to check out for starters are Mint, BUDGT, and Spendee. Make checking your finances part of your Facebook, Instagram, Twitter loop on a daily basis, and you’ll be on your way to spend-savvy faster than you think.
6. Visualize Your Future
No one enjoys that age-old interview question, “Where do you see yourself in ten years?” But, knowing the possibilities will help you plan how to save your money. Do you plan on having a family? Do you want to purchase a house? Put your goals on a loose timeline and work backwards to decide how to best manage and invest your money.
7. Up Those Assets
Certain purchases, like a property, can make great investments that will make you money later on. By buying a house in an up-and-coming neighborhood, you might find a great bargain that will continue to appreciate over time. Plus, this will help you get out of the bottomless pit called “rent” that you keep throwing your money into every month.
8. Get A Finances Mentor
Think about the people you know that are financially responsible. There’s a good chance that they once had the same questions that you do at some point during their younger years. Let their experience guide you, as they’ll know different tips and tricks that can help you save from the same mistakes they’ve made throughout the years.
9. Take Advantage Of Employee Benefits
If your employer offers to match payments that you put into a retirement fund like a 401(k), take advantage of it. It might cut down the amount of money you have available to spend in between checks, but in the long run you’ll be thankful you did this. It’s basically free money you’re leaving on the table if you procrastinate about setting a fund like this up.
10. Warm Up To The Stock Market
In recent years, studies shown that millennials are much more tentative when it comes to investing in the stock market. But for millennials, now is the time to start investing. Do your research and even consider consulting a professional that might be able to put your money into safer, long term options.
However, it should be noted that while trying out new strategies in the stock market can help you learn new techniques, moving your money around from place to place frequently isn’t very efficient. Instead, set up a schedule for adjusting your investments. A general rule of thumb is once a year, especially if you’re planning on being in the market for the long haul.
The Bottom Line
Awareness is key when it comes to your financials. Know where your money is at all times and know what it’s doing. The biggest mistake that millennials can make is to ignore their bank statements and credit reports. By educating yourself on how you can save money and actually applying proven tactics to your own life, you’ll be working to ensure that you have a future full of financial success.
Like This Post? You’ll Definitely Love These:
