In this day in age, saving money can be a scary thing. As the cost of living rises, wages remain stagnant – that is, unless you have the time and financial assistance to go and pursue a college degree. Even then, a living wage is not guaranteed. Millennials account for the largest fraction of the US workforce today and are expected to wait even longer to retire. This is largely due to the aforementioned, ever-increasing cost of living, along with crumbling college debt, and uncertainties related to federal- and state-provided benefits like Social Security.
Still, there are ways to prepare for the future and save, even if it is only a small amount at a time. You don’t have to sacrifice every moment of your life just to stay afloat. Here are a few bits of advice to get you on a healthy financial plan.
Managing your purchases. According to Ubiquity, a leading 401k savings and retirement plan provider, one of the biggest mistakes not many people realize they make is neglecting to educate themselves on the daily aspects of managing finances. Balancing a checkbook is not the most necessary skill anymore, however, for some (since checkbooks are still offered by banks), this can be a great way to keep track of spending habits. By having to write down every purchase and recognize how quickly everything adds up, you can more accurately analyze your spending habits and budget accordingly.
If you do not wish to keep a physical checkbook, there are many apps available for this purpose such as Mint. With this app, you can categorize your spending according to the need: “Home Supplies,” “Groceries,” etc. Without such accountability, it can be quite easy not to realize how much money is disappearing per week if you are buying a coffee once or twice a day.
Balancing credit activity. Another vital thing to devote some time to learning is credit – ideally before you agree to own a credit card. Understand how credit card policies work, the timeline for repayments, interest rates, and ultimately, how all of this, along with your debt-to-income ratio and other financial aspects of your life culminate to produce your credit score.
This is a lesson that far too many people learn too late, and find themselves with a poor score, unable to rent an apartment or receive a loan for a vehicle. It is common that, upon getting your first credit card, many people lose sight of the fact that the money will have to be repaid. Instead of going out and buying everything in sight, keep your balance below 30% of your total credit limit. This way, you are still free to make purchases, however, you will not be damaging your overall financial help.
Use a savings account. Living paycheck to paycheck as many millennials do makes it seemingly impossible to save any money at any point. Don’t be discouraged – this is not out of your reach. By implementing the steps outlined above, you will have a stronger foundation on which to develop a plan for savings. Even if it is only $20 monthly, it adds up and can get you out of a bind in the future if anything happens.
The most important factor in saving your money as a millennial is developing a plan that is unique to you. Don’t be swayed too strongly by advice columns urging you to save outside of your financial means. Take your time and do what’s best for your wallet and your timeline.