Financial Advice That Millennials Should Know
The economy is nothing like it used to be 50 years ago. As much as older people grumpily mumble that millennials are ruining everything, the fact of the matter is that millennials have very little to do with the situation. They were simply born into a time that wasn’t friendly to them whatsoever. While job opportunities have gotten better over the years, the situation could be better than it currently is. Millennials are going to have to stay calm and battle this one though, because, in 20 years, it won’t really matter how bad the marketplace or various industries were — all that’s going to matter is what you did with your time in order to make yourself financially independent. Every move you make, including how you treat your credit score, is going to make a mountain of a difference when you finally decide to settle down comfortably and start a family of your own. Complaining about your financial situation will not help whatsoever, so here’s what you need to keep in mind:
Start Saving Early
Yes, you might not have the largest paycheck in human history during your early 20s, and it’s likely that you’ll be making more as time goes on. However, this is no reason to waste away every dollar that you’ve got – you’re probably going to need some money for tougher days, and if you spend your money on luxuries and partying, you’re surely going to miss it when you truly need it. You never know when you might need it for an emergency, so make sure that you save up at least 20% of your savings. If you find it difficult to control your urges to spend your money, open up a separate savings account so that you won’t ever be tempted to splurge your hard-earned money away.
If you didn’t know, 72% of all millennials have a smaller amount than $1000 in their bank account which is a pretty dismal situation. During difficult times, this amount of money is sure to disappear pretty quickly, so you’ll need to save up far more if you expect to remain financially independent in times of need. So, ensure that you’re saving at least some amount of your earnings in a separate account, even if your savings aren’t exactly 20%.
Don’t Buy A Car
A lot of young people make the mistake of buying their own vehicle early on, thinking that it’ll save them money. However, the truth is that having a car is a luxury that you probably cannot afford as of now. If you’re one of those millennials who doesn’t have more than $1000 in the bank, stay away from the idea of buying your own car — public transport is cheaper! However, if you’re hell-bent on purchasing one, keep in mind the 20% rule where if you can spend just 20% of your income per month on your car and be fine with it, then go ahead. However, chances are that your financial situation won’t allow for that. Yes, purchasing a car is expensive, but the bulk of the expense begins when you’ve driven the car of your choice away from the dealership. Fuel costs alone are high enough to dissuade anyone with less than $1000 in the bank to buy a car. That’s not the only costs you’ll be facing, of course, since cars require maintenance and a whole lot of it. All in all, a car will end up costing you more than what you thought it might, so just stick to walking and public transport for now, and think of buying a car when you’re ready for it.
Stop Wasting Money on Social Events
It’s definitely fun going to the movies every weekend and eating out at restaurants every once in a while. Your friends will probably be doing the same, and spending your money with them will feel right at the time. However, what you don’t realize right now is that this money is extremely valuable and could be used in other ways that could help you out in the future. Spend wisely, and make sure that your social events don’t have to be too costly – there are other ways to have fun that won’t drain your bank account.
It may not be easy being a millennial, but you could definitely help your situation out by thinking and acting smart.
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