If you are a millennial who is looking for financial planning tips that will help you get out of debt or save for a project, then this article is for you.
As millennials, we all have financial needs, but the problem is that the resources are limited.
How then can you save money and how can you get out of debt at this young age?
Well, I will be sharing some tips with you in this article.
In fact, many people in our Telegram group have used these financial planning tips to get out of debt and raise capital for their business.
Who is a Millennial?
The millennials are those between the ages of 15 and 35 and have recently become the largest percentage within the workforce in many parts of the world.
Many in this age group are first time earners and do not have the proper attitude as far as handling money is concerned, needless to say, they run into money problems a lot.
If you want to get out of debt and hit your money goals consistently, then these financial planning tips for every millennial will help you.
9 Simple Financial Planning Tips for Every Millennial
These financial planning tips will be genuinely helpful to every millennial as regards handling their finances.
It’s important that you follow the tips in this article with discipline.
It may be slightly inconveniencing in the beginning, but as you continue, it will come naturally to you.
1. Make a Budget and stick to it
Before you come up with a colourful pie chart, you must first evaluate all the money that you deal with, cash inflow, cash outflow, etc.
You have to go through your bank statements and receipts to be able to do this.
This would help you determine how much you spend on essentials, frivolities and so on.
This step is helping you achieve two things, tracking your spending as well as setting financial goals.
You can know how much you earn on the average and what percentage you can comfortably put away.
2. Follow the 50-30-20 rule
The 50-30-20 rule is a rule of thumb for personal finance, one that should even guide your first step of making a budget.
It suggests that you spend 50% of your earnings on necessity alone. Necessities should include food, shelter, transportation etc.
While some argue that clothing is a basic necessity, I suggest you classify it under luxury especially for millennials who struggle every day with social media timelines shoving tempting offers of clothes to them.
So if there is any other thing that cannot be done without, such as drugs, they may be included under this 50%.
The second 30% should cover the lifestyle. I like to call it luxury or simply spending on one’s self.
Here you would find, Vacation, Gym subscription, Clothes, Netflix, Phone recharge, gifts for loved ones and so on.
This 30% are things that would make you happier than you would be without them but you can do without them without getting sick or even dying.
Your last 20% must be put aside for saving or clearing debts if you have any.
You must save because of emergencies, nobody knows when they will happen.
A savings account or an app will help every Millenial prepare an emergency fund.
However, this 20% is only a minimum as you can choose to increase it depending on your lifestyle choice, your income, the amount of debt you have to clear or even the target amount you intend to save before fixed time.
For a millennial, he is just starting and is free to take baby steps with this 20% fraction.
As life goes on, he will probably have to increase this fraction based on responsibilities.
This habit is just to inculcate the discipline of putting something aside.
3. Have a Financial Goal in Place
It is said that goals give our lives meaning.
This holds a lot of truth when it comes to finances.
You need to have goals;
- Why are you saving?
- Is it necessary for you to invest?
- Why are you sticking to your budget?
If you can answer these questions, the next thing will be to divide your goals according to when they will mature.
I assume those goals have a quantity and time limit.
For instance, ‘I want to save $500 in 3 months” is an example of a short/medium-term financial goal.
A long-term financial goal might be to buy a property, to deal with this, you split them into smaller achievable goals.
4. Make investments no matter how little
You are wondering how a 20-something novice investor will get into the market, worry not, it’s a no-brainer.
Follow the first step to evaluate your current financial abilities.
The second step will be to keep your eyes on the 20% savings in the 50-30-20 rules.
As far as investing is concerned, split the savings into two halves.
Now, don’t invest everything, put aside 10% for savings in case of emergencies and invest the remaining 10%.
When it comes to investing, there is a sea of options available, stock market, real estate, mutual funds, and so on.
You have to be willing to educate yourself thoroughly before starting.
Get an experienced person in any of these fields to walk you through so you don’t make mistakes that cost your hard-earned money.
5. Sneak away the much you can in retirement accounts
If you think it’s too early to think about retirement, think again.
Time flies so fast and you don’t want to be caught unprepared for the rainy days.
Some companies offer retirement plans, you should take advantage of this if you work with such.
If you don’t, don’t worry you can put aside a small percentage of your earnings tax-free in an Individual Retirement Account.
You don’t want to underestimate this because every $100 you save now will be worth more than $1000 in 40-45 years.
If you wait till you are 40 or 50 it will not be worth that amount.
6. Diversify your investments
Many sources suggest that diversifying your investments into broad-based stock mutual funds will help reduce your risk.
This will help you minimise losses in moments where the market drops if such happens at all.
A drop in the market should not even cause your blood pressure to rise because a millennial has enough time for the market to rise again.
7. Look for credit cards with the lowest interest rates.
Credit card interest rates can be annoyingly high but there are still some that offer reasonably low-interest rates.
Be wary of cards that promise bonus points for travel and other enticing packages because your eye is set on low-interest rates.
Paying off credit card debts is not something you want to spend all your life doing.
So, if you can’t afford to buy it with your credit card, just reconsider it completely.
It means you ‘truly’ cannot afford it.
8. Get a side gig
If after following the steps from one to this point, you still struggle with your bills and other essentials, then you might want to consider a side gig or any means of making money online.
You can find a seasonal part-time job during weekends/holidays to offset what you spend on presents and other luxuries.
You might also try out one of the avenues listed in this top online businesses that could make you rich in Nigeria.
9. Discuss Personal Finance with your circle of friends
You might find the subject of jobs and income a little challenging as a topic you would discuss with your friends over pizza but it’s worth it.
Friends have a huge influence on our lives and they can be effective in a topic as crucial as finance. You can have a career-chat night with friends.
Bring a bottle of vino and some tubs of ice cream to discuss things like; how you all ask for raises; how you landed your jobs; how much you make and how much you made when you started, your saving plans, and so on.
You would be surprised at how this works.
It may even help take away any kind of embarrassment you’d ordinarily feel when talking about money and spending habits.
Summary of The 9 Finacial Tips that Every Millennial Ought to Know
As millennials, we are faced with a lot of financial problems.
If you look at it carefully, most of these problems come as a result of the pressure of social media.
However, we can always overcome our financial issues with these planning tips written for every millennial.
If you can apply these tips with discipline, you will be well on your way to achieving your financial goals.
Here are some other resources for further reading.