The idea of having spare money to save in the bank is a laughable matter to most Millennials.
Let’s be honest here.
Saving money can seem absolutely impossible when you’re young and apparently working for only a couple of years. Aside from the fact that millennials have student loans and credit card debts to pay, the reason why young professionals struggle with money is that they were never taught how to manage their finances well. Schools will teach us how to use our skills and knowledge to get a real job and make money out of it in the future but no required subject will teach us how to use the money we make in a smart way.
A study shows that 73% of millennials with ages 18 to 24 years old have less than a thousand dollars in their savings account. Hmm. Feel guilty yet? Of course, we all do. But, don’t fret. While you are young and novice, you still have time to improve your bad spending habits and live your best financial life. Take a look at our top 5 money management tips to help you get started.
Live off what you make.
The first thing you need to learn is self-control. Personal finance is as simple as if you can’t purchase in cash, then you can’t afford it. So, stop right there! Will you buy something that’s worth a hundred times higher than your paycheck? Even if you have the means to take out a personal loan or swipe your credit cards to afford it, the thing is you don’t want to end up paying interest on a designer bag, don’t you? My advice: budget your money according to how much you make. In other words, avoid making a huge purchase until you have the money on hand, minus your savings.
Keep one credit card only.
It’s okay to take on debt as long as it’s a good one. The only time you’ll know it’s good debt is when it increases your net worth; otherwise, it’s bad like really bad. If you can’t cut out your credit cards by considering the convenience and rewards they offer, try to keep one and use it responsibly. Trust us when we say you don’t really need to piggyback all those cards when they can only put your head underwater once the bills arrive. And by using responsibly, we mean paying off your balance IN FULL each month.
Don’t wait to invest in your future.
Millennials can easily justify that they are too young to think about future investments such as retirement funds or life insurance policies. Sure most of us would say we still got a lot of time ahead of us, but that is exactly the reason why we need to start investing while there is a long period of time to contribute and premiums are still lowered. Considering long-term investments at a young age will give you the advantage of growing your contribution in a long period of time and benefit from it in the future.
Start building an emergency fund.
Unexpected expenses can wreak havoc on your personal savings, which is why it makes plenty of sense to have separate money saved up for an emergency fund that will cover all inevitable events. You’ll get surprised to see big results from starting a small amount that adds up in the long run.
Earn a little extra on the side.
We live in an era when a full-time job is so not enough. Luckily, there are many ways to start a sideline and earn some extra money out of it. Of course, your special skill is a bonus; so, think of creative ways to put your talent to use. Then again, learn to earn on the side without compromising your health by overworking to save more money.