Millennial finance is one of the topics that is starting to gain traction lately. One factor in this is that this generation has started to show its strength in numbers. Chicago Tribune explains that millennials at present are the biggest generation in the country’s workforce. It is safe to say that they are now starting to be the main driving force of the economy because of their sheer number.
As they start to take on the workplace, millennials experience debt problems as well that are at times specific to their generation. Student loans are one of them where their average annual debt amount has been increasing year on year. As such, millennial finance is starting to pick up as a necessity. If you belong to this generation, here are some of the items you need to consider as you try to manage your funds.
Have a comprehensive budget to control cash flow
You need to start with a budget in order to have a bird’s eye view of your finances. You might be a little hesitant because you think you need a complicated program. On the contrary, the simpler your budget is, the better. You can start by writing down all your sources of income. Then have another list for your fixed as well as discretionary expenses.
As you have these details, you can start looking at your budget and manage your cash flow. The idea is to have more than enough income to cover your expenses. As you accomplish this, you will have funds to use to strengthen your financial position. This means having
Pay yourself first should be part of millennial finance
This simply means that before you start assigning dollar amounts to various expenses and funds, you should not forget about yourself. It does not mean that you have to set aside an amount for shopping but in contrary, an amount to save. This is one of the best ways to develop the habit of saving.
The idea is to treat it as an expense and, much like most payments, you cannot get it back after. Although it is still with you in an account somewhere, taking on this mentality will help your savings preserve that amount. This way, you can still save money with minimum wage and be able to reach your financial goals.
Keep an eye out for lifestyle inflation
Millennial finance has a lot to do with controlling how you manage whatever income you have. The problem is resisting the urge to increase your lifestyle abruptly with the slightest increase in income. This can quickly happen from being a broke college student to getting your first job having a fixed salary every month.
US News shares that lifestyle inflation is a natural process as you grow up. It is to be expected but you need to approach it methodically. The same set of clothes you had in college might not work for you when you start working. However, it does not mean that you have to replace your complete wardrobe all at the same time. Do it gradually and weigh cost and durability when doing so.
Never stop learning
The problem with some people is that as soon as they graduate, they believe they have everything they need and cease learning. Perfection is an ever moving target meant to make you a better version of your former self. That is why you need to continue learning as much as you can especially when it come to your finances.
The more you learn how you manage your finances, the better you can become at it. The better you are handling your finances, the stronger they become for future need. It can be your reserve funds or even for your retirement needs.
Take advantage of free money
Millennial finance, at this point, has a lot to do with trying to minimize debt as much as possible. For millennials that are still in school, you need to make the most of the free money in the form of scholarships and grants. As you do this, it will help you manage a number of student loans you incur leading to your graduation.
If you are already working, one of the financial mistakes that can come back to haunt you is neglecting your 401(k) matching program. That is money on the table being given to you by your employer. You just have to make sure you understand how it works on what amount you need to put in to get the match. As you do this, look into the vesting schedule as well in case you find the need to transfer to another company.
Consider disability insurance
St Louis Post-Dispatch explained that disability insurance forms part of your social security. However, there are a lot of millennials lost to the idea of taking up disability insurance. This has a lot to do with the “live in the moment” attitude of the younger generation. There is also a feeling of invincibility being young and able to take on the world.
The problem with this is that you never know what will happen in the future and accidents could happen. If you are a graphic artist and you contract an eye disease that puts you out for months, what will happen then? Disability insurance helps cover you financially in cases where you are disabled and unable to work.
Increase your income
Millennial finance has a lot to do with increasing income to help you achieve all your plans. However, this is easier said than done as times are changing as well as debt amounts are increasing every year. One of the things you can do is to make use of the extra time you have coupled with your interests or hobbies.
A side business is one of the things you can look into such as putting up an online shop. You can manage it from the comfort of your own home with the least amount of work. Income-positive hobbies can also help you make use of your talents as you offer your services to family and friends. Consider as well if you can bake cakes for special occasions or even be a photographer on weekends. You get to do what you love and earn from it at the same time.
Money talks with your spouse
If you are married, you need to have money talks with your spouse to have a common strategy with the way you will handle your finances. This is especially useful when you are trying to figure out how each of you approach financial management. One could be a spender while the other loves to save.
It is important to take note that you will always have differences with your spouse even with the way you view your finances. However, the trick is finding a way to pinpoint each other’s strengths and weaknesses. With that in mind, you use each of your strengths to compensate for each other’s weaknesses. This helps you get through life together.
Millennial finance is starting to take the limelight with the generation starting to take over the workplace. The better millennials are able to manage their finances, the better it translates for the economy and everyone else.