Millennial Money Management: How to Better Handle Your Finances
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As an adult, the world expects you to conquer money management in order to live life efficiently. Proper money management is essential for a comfortable life and a better future. The problem is schools never teach you financial literacy.
Plenty of millennials struggle with money management at some point in their life. Millennials make the highest percentage of non-savers. So you’re not alone if this resonates with you.
Keep reading for a guide on how to handle your finances better. Find it here.
Proper Money Management Starts With Budgeting
The first step to properly manage money is to sit and create a budget. A budget easily stands out as one of the essential tips for savings. It’s the only tool that enables you to spend wisely.
Without a budget, you’re prone to spend on anything that triggers your dopamine. This feel-good chemical is responsible for most of the buying decisions we make. The best way to control it is to arm yourself with a budget.
Creating a budget is something easy. You’re looking at your income versus the expenses. You may make money but where does it go that your savings have stagnated?
List down all your income streams and total them up to see how much money you make every month. Next, add up your expenses. You have to start with the compulsory expenditure that you can’t live without. These include bills, clothing, education, and savings.
In Rich Dad Poor Dad, Robert Kyosaki recommends adding savings to expenses. That way, you never exhaust your money before saving.
He also says you must pay yourself first if you want to grow your savings first. This is among the money tips that are hard to act on. But it makes a lot of sense in money management.
Start Side Hustles to Boost Your Saving Power
Most money management advice concentrates on promoting a saving culture. Tips for savings do pay off but sometimes they seem impractical when you’re scraping a living. Saving may also mean depriving yourself of some comforts for a better tomorrow.
Starting a side hustle can make you more money to channel to your savings. If you have one income, saving can be stressful and sometimes dull. The slow growth of savings is often demotivating for most millennials. A meager income is one of the reasons money management tips might never make sense to you.
51% of millennials have a side hustle for a cash stream other than their primary source of income. Millennials are doing home repair, landscaping, babysitting, dog sitting, eBay reselling, and freelancing as side jobs. On average, side hustling millennials make $580 per month.
Learn to Overcome Negative Money Peer Pressure
40% of millennials overspend or get into debt to keep up with friends. Most admit they can’t say no when their friends recommend doing something they can’t afford.
Money peer pressure is real and it’s one of the reasons you may struggle with money management. Sometimes, you may have a budget. But for an exciting trip, you end up spending because you don’t want to miss out.
It’s tough to say no to your friends. It’s even a bigger challenge when you’re following them on social media. Here are some tips to help avoid peer-pressured spending.
Budget for Events
Saving is a challenge and can sometimes feel like you need a break. Still, it would help if you stuck to your savings goals. Remember to budget for mini-trips and fun-night-outs when setting financial goals.
Be Honest With Your Friends and Family
If you can’t afford something, don’t shy off or keep it a secret. Be honest and let friends know you have long-term financial commitments.
Good and loyal friends should respect your money choices. By being honest, you might help some friends who are facing similar challenges. You also give them a chance to support you.
Leave Your Credit Card at Home
Credit cards can make you an impulse spender. You may not think twice about buying friends a round at the bar when carrying your credit cards. To stay disciplined, consider leaving your credit cards at home and limit spending to cash on hand.
Automate or Gamify Saving
Money management is bound to be tricky when you decide on saving amounts after a paycheck. An effective way of how to save money is automation.
Have a separate savings account and set a direct debit to it whenever your paycheck comes in. This way, you can spend the balance without fear of risking your financial future.
Another financial tip is to join a savings challenge. Set up a goal and commit a percentage or timeline towards it. It could be something like saving a fixed amount every week for one year.
Develop Your Financial Acumen
If most financial tips sound cliche, then immerse yourself in financial literacy content. Research and read what various financial experts recommend on money management. Also, listen to financial literacy podcasts when you’re not reading.
Figure out which expert advice you resonate with most and what works for you. No need to try to implement every single tip at once. Remember, baby steps turn into large feats.
Think Long Term and Reward Yourself along The Journey
According to a financial advisory expert, short-term and mid-term financial goals are great steps towards money management. Yet, if you want financial independence, you need to have long-term financial goals.
Long-term goals might feel far away but they are necessary to keep you committed to your finances. You can keep the momentum going knowing your aim is to become well-off.
Have clarity and be specific when setting your long-term financial goals. This is because you need lots of focus and inspiration to stick to these goals. Instead of saying I’ll buy a home, say I’ll buy a beach property worth X amounts by year X.
Set milestones to allow you to track progress. Completing a milestone can inspire you to continue saving. Reward yourself with a mini trip, nice dinner or a gift to add some fun to your journey (without going overboard).
Apply the Best Money Management Tips for a Successful Future
As you can see, successful money management is about making sacrifices. But it’s well worth it! The work you do now will make a huge impact on your future.
For more tips and advice on personal finance, check out the rest of our blog.