Young adults in their Millennial and Gen Z generations typically struggle to manage personal finance due to an inadequate level of financial education. They lack an effective savings habit; without emergency savings they are vulnerable to unexpected expenses. Thankfully, they […]
Young adults in their Millennial and Gen Z generations typically struggle to manage personal finance due to an inadequate level of financial education.
They lack an effective savings habit; without emergency savings they are vulnerable to unexpected expenses.
Thankfully, they can make changes that will put them back on the right track. Here are a few suggestions to assist them.
1. Set a budget
Establishing a budget is key to managing your money effectively, whether that means paying off debt or saving for something significant. Utilizing either an app or spreadsheet can help track spending, identify areas for cost cutting and set savings goals.
Millennials and Gen Z often face unique financial challenges, including irregular income from gig economy work and rising housing costs. With these tips as your guide, taking charge of your finances will set yourself up for financial success in 2019.
An effective budget can help you build an emergency fund, save for unexpected expenses and boost retirement savings. Many young adults struggle to juggle expenses with financial security needs – this article’s personal finance tips may provide insight on how you can save money in your unique situation. 1. First determine how much income is earned each month through job or side hustle income sources or investments (this includes all forms of passive income such as side gigs).
2. Track your spending
As you begin tracking your spending, it may be useful to divide it up into broad groups. For instance, if you set aside “fun money”, keeping track of that can be easier if it is kept separate from bills and savings accounts; doing this helps avoid incurring debt due to purchases you cannot afford.
Track your spending using an app or spreadsheet. When spending, record the amount, item (or store name), and date. Alternatively, a checkbook with columns for credits and debits could work, or just keep receipts in a shoebox.
Select a system that works for you and commit to it – tracking expenses should become part of your daily routine, like flossing. That way, it will become much simpler to see where money is being wasted by unnecessarily spending, and make necessary changes. Aim to do it at least once each week or month.
3. Make a savings plan
While it is beneficial to set aside money for long-term goals such as vacations and house down payments, setting aside an emergency fund is equally essential. Saving enough to cover three to six months of expenses will prevent borrowing money when unexpected situations arise and relieve stress when life throws you a curveball.
Saving money may look different for everyone, but being intentional about how you approach it is always beneficial. Here are a few useful tips that will help maximize the effectiveness of your savings plan.
Before making a major purchase, take 30 days to assess a decision and ensure it aligns with your financial goals. This will keep the impulsive part of your mind at bay and help avoid overspending; additionally it allows you to test if the item you’re eyeing really needs replacing; often similar options exist cheaper elsewhere.
4. Pay off debt
Though many millennials and Gen Zers struggle with managing their finances, there are steps they can take. By studying topics like budgeting, savings and debt they can start taking control of their finances.
One of the most essential tasks is paying off debt. While this may be challenging, millennials should prioritize making this a top priority and explore all possible methods for doing so; whether this means finding roommates to share living costs or selling expensive items to cover any shortfall in debt payments.
Millennials must ensure they’re contributing enough to their 401(k)s and other retirement savings accounts, paying more than the minimum monthly payment on credit card debt, focusing on eliminating high-interest debt first to save money long term, celebrating debt repayment victories with low cost celebration events (ie: dinner party, dance party or facial mask treatment), etc. All these steps can make an enormous impactful difference to financial well-being!