Halloween aside, gloom and doom seem to be the only thing on the horizon for millennial finances. Many millennials feel the pressure to succeed early in their careers and finances, despite being new to our fields and graduating in one of the worst economies ever. We compare our financial situations to everyone from our parents to the 23 year old that runs a unicorn tech startup and has an IPO launching next week.
It’s easy to see where others are now and quickly compare yourself to their unique financial situation. Beat-up cars, cramped apartments, ramen noodles, and a tiny budget seem to be all the future has to offer for many millennials today. Just because you can’t afford your parents’ lifestyle now doesn’t mean you won’t be able to in the future. Talk to them about the early days when they were a struggling young couple and what they did to make it work. If you are anything like me, my family has stories of digging through couch cushions for loose change to buy milk. When you feel stuck, go back to the basics of budgeting.
Know your habits
What do you spend the most money on? Take a quick look at your account to see where all that money went. Most likely, it isn’t large purchases but rather small ones like Starbucks lattes that add up over time. Eating out, transportation and entertainment all seem like something small at the time but over a couple of weeks, they can surpass what you spent on your TV. Cutting back on spending can be as simple as only eating out once or twice a week and using public transportation more often in place of Uber. Treat every little purchase like a big purchase to cut down on thoughtless spending.
Save 10%, spend everything else
If spreadsheets and the envelope system aren’t for you, stick to the basics. Set up your savings to go directly into your account. Taking it off the top means you won’t miss it as much and you don’t have the chance to spend it. See if you can increase to 12% or 15% over time. Following this one budgeting basic sets you up for a lifetime of getting in the habit of saving. If this is all you can do, that’s enough for now. Adding automatic payments for your bills and calendar reminders go a long way to help you take control of your expenses.
Know your credit score – and keep it up
If nothing else will convince you of keeping your credit score up, a new study revealed it may help you find and stay in a committed relationship. Your credit score is used in practically every major purchase; keeping it up will save on interest costs and help you get approved for a house, car loan, or even a refinanced student loan with Purefy. If you are looking for a new credit card, our partners at Magnify Money have great tools to help you see which is right for you.
As millennials, our greatest asset to building wealth is time and establishing good spending habits now. We have time to pay off debt, build equity and find the budget that sticks with us. Start with the basics, and watch your money grow. And if you need to save on your student loan repayments, give us a call.