• Savings

    Financial Tips for the Clueless Millennials

    SavingsMillennials always find themselves in situations where they would say, “Why didn’t they teach me this in school?”

    They spend an average of 17 years being educated, and yet there a lot of basic things that weren’t taught in school. Financial literacy is one of them, and the youth often learn about it the hard way.

    So here are all the financial information that millennials can find useful:

    Have an Emergency Fund

    Emergency fund means having at least 3 months (Preferably 6 months) worth of your total expenses in the bank. You need to have this ASAP. This fund is strictly for emergencies. And no, these emergencies are not relative. You can’t use it to buy the shoes you want and you can’t just promise to pay it back when you get your next salary. This is your buffer for redundancy, medical expenses, or any unforeseen major expenses. It protects you from having debt due to these emergencies. Once used, make sure to deposit back to it again. Treat this as one of your monthly bills.

    Start a Retirement Fund

    Even if you’re in your 20s, you need to think about taking care of your future. Research on the different types of retirement accounts in your local banks. Financial experts suggest to save at least 10-15% of your salary. If you’re currently in debt, start with 2-5% of your income and increase it as you see fit. Now this is strictly untouchable. This should also be treated as another bill which should be paid for every month.

    Track your Expenses

    If you already know your expenses month on month then you can skip this part. If not, this is what you need to do. Itemize your cash flow for an entire month (or keep doing it for 3 months to know your average). All the money coming in and going out, from your phone bill down to the piece of candy you purchased in the store, should be accounted for. Have different labels for them and see where your money goes. There are different kinds of apps that can help with this.

    Budget Everything

    Since you know where your money goes every month, you have a better grasp of where to allocate your money. People who are financially stable keep tabs on their expenses. Discipline and commitment are very important here. It’s easy to get tempted to go beyond your budget, but you owe it to yourself to spend within your means. If you’re able to stay within budget and you still have extra, you can get a portion of it to reward yourself. Save the rest.

    Pay Bills Immediately

    Some people tend to delay paying off their bills. Avoiding it may lead to missed cut-offs and you may incur charges because of it. Have a strict date on when to pay your bills every month. It does hurt sometimes but there is that sense of fulfillment.

    Eliminate and Avoid Debt

    If you don’t have any debts, congratulations. If you do, please remember this, all is not lost. Pay them off as soon as you can, especially those with high interest rates. If you get extra money, best to use some of it to pay off those pesky credit card bills. It sucks, but hey, you used money that you didn’t have. Use your credit card only if you’re responsible enough to pay them all off at the end of the month.

    Save for your Goals

    Want to travel to another country? Drive your dream car? Buy that beautiful house? Put an amount and a date on when you want them to happen and start saving. As they say, a dream without a plan is just a wish. Create a game plan, commit to it, and watch your dreams become a reality.

    Add another source of income

    If you stick with just employment and rely on your salary, it might take you longer to achieve financial freedom. Look into your network and talent inventory. What can you do well and make extra money for it. Do you write well? Consider getting writing gigs on the side.  Who knows, you may be able to grow your side job into a full-time business. Freelancing may be able to help you reach your financial dreams faster.

    Invest in your Future

    Be more proactive and look into different kinds of investments. Learn more about stocks and bonds. Grow your portfolio and help educate other people. Financial literacy should never be overlooked.

    While you’re still young and still not weighed down by responsibilities, it’s ideal to start financial planning. You’re at an age where anything is possible.