If you compare the baby boomers with the millennials, there is a lot that the latter enjoys that the former couldn’t. At the same time, it is also true that the millennials are lacking in a number of ways; bluntly speaking, the older generations were more well-to-do than the younger ones. Take the case of financial literacy. How often did we see our parents struggling at financial management? It seemed as if they always had ‘the money’ to cater to our needs! This is so not the case with an average millennial today. In fact, the financial struggle is more widespread than we realize.
Why does the Gen Y struggle with finances in the first place?
There is more than one right response to this. For once, the constant yearning to get more in less leaves them with a hole in their pockets. From the food they eat to the success they dream to achieve, everything for the current young generation needs to be fast- which obviously comes with a price. Social media, on the other hand, gets a major share of the blame. More often than not, the youth falls victim to the pressure of social media, where everyone seems to be vacationing, following the latest trends in fashion and striving to gain the largest share of followers. The fear of missing out or as we call it ‘the FOMO’ leaves them with no option but to dive right in.
What can the millennials do to become budget friendly?
Go traditional. Yes, it sounds old school, but our parents and their parents did crack the code to attain financial stability. If you follow what your parents did with their salaries (and, probably still do), you might find yourself in a much better place, both financially as well as mentally.
Here are some of the best money tips for millennials to achieve financial stability:
Do Not ‘Shop-Till-You-Drop’
We all have been victims of the guilty-pleasure that comes with shopping. A shopping spree before Christmas, birthday, or your anniversary is understandable. Making it a habit is what you need to keep a tab on. If you do not know where to stop, you will most likely end up bankrupt before the month comes to an end.
The most optimum solution is to budget your expenses. Divide your income into categories, such as food, rent, daily commute, entertainment, and miscellaneous just as you get paid. This way, you will always have money for the essentials and you will never go overboard with wasteful expenditure.
Since echo-boomers mostly comprise of young adults, they lack experience in financial management. It can be overwhelming to manage expenditure, save, and invest all at the same time. It is always best to seek advice from the veterans. Your parents, seniors at work, and even your peers can help you with meaningful advice regarding budgeting. If that is not enough, there is always the option to seek help from professionals in the field.
Find A Roommate
On average, rent takes away 30% of a person’s income each month. And this is when you are living in affordable accommodation. In case your home-hunt ended with you moving in the first apartment you came across, without doing any market research, you are probably paying a higher than usual rent. Since moving out is not always an option, the best you can do is find a roommate. This way, you will only be paying your share of rent, electricity, and food, where the rest can go to savings.
Credit Is For Emergencies
The biggest financial trouble that the American youth struggles with is credit card debt. A majority of credit card holders admit they are under debt and are facing difficulty paying it off. If your aim is to be financially healthy, the solution at hand is cash. Cash payments reduce the chances of wasteful expenditure since you can only spend what you have already devoted. Overspending becomes less of a possibility when paying with liquid cash, which otherwise is significantly tough when using a credit card.
There are many reasons why it is important to save. Professionals advise every salaried individual to save at least 15% of their salary for retirement, apart from emergency funds. Your savings will guard you against unforeseen circumstances. For example, you might need to buy a new appliance, your car might need emergency service, or you might need medical care which can leave you with a financial crunch if you do not save.
Invest Wherever Possible
Every time inflation occurs, your money loses value. Savings alone are not enough if you want to gain more. Small investments from time to time can help you gain a secure position financially, for example, you can invest in stocks. Money sitting idle is not the best solution to build a secure future.
And Lastly, Learn From Your Mistakes
The best way to learn is to learn from your mistakes. Financial expertise comes with experience and you should not be scared of taking chances. All in all, millennials must work hard, save, and invest to get good returns on their hard earned money. And if you own a small business, financial advice from a CPA and using a smart accounting software hosting solution such as QuickBooks hosting will be enough to help you sail through.