A recent surveyrevealed that 70 percent of millennials do not feel that high school or collegeprepared them to be able to handle their finances as an adult. But, we all know that understanding thebasics of money management is vitally important in the world of adulting. Here are five financial tips for millennialsto help get them on the road to financial stability.
This postis sponsored by CreditRepair.com. All opinions are mine alone and are honestlyconveyed.
The spending habits of the millennial generation is quite different than their parents or grandparents. And while the economy, the job market, technology, and many other aspects of how we live life daily has changed, solid financial principles have not. Implement these financial tips to get your finances on track:
Set a budget
Creating a budget is the first step in getting a handle onyour finances. This will help you to layout all of your monthly bills and expenses that need to be paid. Next,figure out how much money you have coming in each month. And finally, determine out how much is leftover—this is the discretionary money that can be used to pay for the wants in life.
Learn how to cook
What does learning how to cook have to do with handling finances? Actually, quite a bit. A 2017 study byBankrate found that the average millennial dines out or gets carryout at least five times per week, 29 percent of millennials buy coffee out atleast three times per week, and 52 percent go to a bar at least once during theweek. While any one of those stops, inparticular, may not be overly costly, adding up all of these expensivehabits for the week is definitely hurting millennials’ budgets. Yes, it takes more time—and a bit of skill tolearn—but cooking your own meals, and making your own coffee and mixed drinks,can save you a lot of money in the long run!
Overcoming FOMO
Do you suffer from the fearof missing out, also known as FOMO?
Your best friend just pre-ordered the newest iPhone, and allof a sudden your smartphone from last year seems so outdated, but you reallycan’t afford the upgrade right now. Agroup of friends that you like to hang out with invited you to go to dinner anda concert next month, but you know that little adventure will end up costingyou several hundred dollars—and you really wanted to put that extra moneytoward student loans.
It can be hard to make mature money decisions that will putyou in a better financial position, especially when it seems that everyonearound you is having fun—and, of course, you want to be out there having funtoo! But, you can’t allow your desire tobe accepted by others control your spending habits. You must learn to prioritize your needs over your wants. Stop worrying about what others think. When it comes to your budget, you have tolive within your own means, and constantly comparing your life to others is nota good habit. So instead, learn how to havefun on a budget—and invite your friend too!
Pay yourself first
Pay yourself when you get paid. It kind of sounds silly to pay yourself first,but when you think about it, it makes a lot of sense. As soon as you get paid, allocate a portionof that money toward savings and retirement.If you can, set this up to automatically come out of your paycheck andgo directly into a different account—that way, you don’t have to worry about ithitting your checking account and getting spent.
- Set up a personal savings account foremergencies. It is a good idea to have asavings account large enough to cover three to six months of householdexpenses—just in case.
- Open a traditional or Roth IRA. Besides having an emergency savings accountand being ready for the unknown, make sure to plan for the security of yourfinancial future. Contributing to atraditional IRA can give you a bit of a tax break up front, while putting moneyinto a Roth IRA will allow for tax-free growth on your investment.
- Participate in your employer-sponsored 401k plan. Don’t turn down free money! Most employers offer some sort of matchingcontribution when you are enrolled and contributing to the company’s 401kplan. So, for example, if you contributeone percent to the 401k plan and your employer matches that, then you areadding two percent of your income each month, but only having to contributeone. And that money is typically takenout of your paycheck pre-tax!
Clean up your credit
Do you pay your bills on time? Are there collectionaccounts, bad debts, or old items showing up on your credit report? If your credit is less than perfect, it maybe costing you extra money each month.
How is it costing you money to have bad credit? Whenever youapply for a new credit card, auto loan, or home loan, the potential creditortakes a look at your credit score and assesses your credit-worthiness, based onyour credit score. It is generallyconsidered a goodcredit score if that number is 700 or above. But if your score is below that, even thoughyou may get approved for the loan or line of credit, you may not be getting thebest rate. And when you get a higherrate, it results in a higher payment… which results in a higher monthlybudget.
So what steps can you take to increase your creditscore?
- Make sure to pay your bills in a timely manner
- Pay down credit cards or other out-standingdebts
- Settle collection accounts or bad debts that arestill showing on your credit report
- Seek a credit repair professional. If you don’t know where or how to start, youmay need the help of a professional who can work with you to identify ways toincrease your credit score and assist you in taking the necessary stepsthroughout the credit repair process.
