4 BASIC FINANCIAL TIPS FOR MILLENNIALS
Before it’s going too late, you should save your money ASAP.
If you’re reading this, there’s a good chance you didn’t start a retirement account with your first paycheck – despite what your parents told you. The bad news is that if you had put a portion of your very first paycheck away, and did the same from every subsequent check, you would have done better financially than if you start putting money away today. Compound interest is incredible, yet a tricky thing.
Before it’s going too late, you should save your money as soon as possible. Maybe some of you are on the first stage to receive your first paycheck, and in a hurry picking a destination you would like to explore. Be calm and take a deep breath. Here are tips to get you on the right track.
Learn to budget
An integral part of effectively managing your finances is learning how to budget and then sticking to that budget. Resist the temptation to make a reservation at that fine dining restaurant you’ve wanted to try out for ages after seeing the lump sum in your account on payday. You need to ensure that you have put aside what you need to save and your monthly expenses before you make it rain.
Putting your savings away is the easy part, but it can sometimes be tricky to know what of the remaining amount can be used as you please and what is strictly for monthly expenses. Then calculating each of these figures is a great idea. If once you have done that then you have any money left over, it’s a good idea also to pay off any outstanding debts or add it to your savings.
Track your spending and stick to the plan
One of the best ways to figure out your budget is to start tracking what you spend every month. That lunch you buy every day for work could be seriously ruining your cash flow every month. If the idea of manually writing down every purchase is too much and gives you anxiety, but the important thing is to ensure that you take your savings out the minute your salary comes in, and account for any debit orders that come off. Once you know exactly what you have left, try to work with that, but learn to live on a smaller budget.
Build an emergency fund
An emergency fund is essentially money that's been set aside to cover any of life's unexpected events. This money will allow you to live for a few months if you happen to lose your job or if something unexpected comes up will cost a fair chunk of money to cover.
Think of it as an insurance policy. Rather than paying premiums to an insurance company, you're setting aside money for yourself that can be used later. This money can then be accessed quickly and easily if some unfortunate event happens to occur.
Many banks and financial experts suggest that you should save at least three months' worth of salary in your emergency fund. That way if you do lose a job, you'll have enough money to get by for a few months until you can find replacement work.
However, depending upon your preferences and income level, the amount can be vary. You should first calculate what your living expenses are.
Resist lifestyle creep
The only way to understand and change how you spend your money is to track how and when you spend it. Making and keeping a budget is the first thing you can do to ensure that your spending stays in check while your income grows.
One key thing to keep in mind as you budget is that you should prioritize experiences over physical products. The reason is simple. Research shows that experiences bring you more happiness.
If you are able to limit your spending but increase the amount of satisfaction you receive from the money you spend, it’s a win-win. You’re better off financially, and you and your loved ones will enjoy it rather than feel like you’re suffering by tightening the purse strings.
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