6 Ways Millennials Can Take Control Of Their Finances And Budget Accordingly
As I speak with more and more Millennials, I am deeply troubled by the lack of concern we have for budgeting. In fact, many Millennials see budgeting as unimportant.
Finance and budgeting are vital to experiencing a life of financial security. Living without a budget is living life without a safety net.
One thing I know is that living for the moment can cost you years of debt and heartache. When you live for the moment, you incur a lifetime of misery. Budgeting empowers you and places you in the driver's seat of your financial future.
1. You must understand that you need a budget.
Even if you are comfortable financially, a budget gives you the ability to properly track your spending. Also, budgets are a great way to assess your true financial health.
Money you don't account for is money that will get away from you. In fact, it is not hard to waste money frivolously on nonessentials. When you have a budget, you are able to account for every dollar you spend. This is a great first step to financial freedom.
2. Write down your financial goals.
Anything you don't write down is something you are not serious about. The same holds true when it comes to your money goals.
I advise writing your money goals in categories. Set long-term, intermediate and short-term financial goals. You have a better chance of accomplishing things you plan for. Visit these money goals regularly and write out time-sensitive deadlines to keep you on track.
3. Make saving a priority.
Saving is not a bad word. While we are Millennials, and we love splurging, you cannot live for today at the expense of tomorrow.
According to Daily Finance, you should divert 10 percent of every paycheck to savings. If you cannot do this, then set a number that is realistic to you. The point is to start saving.
Saving is a vehicle to financial security and financial freedom. When you save today, you are taking steps to secure your tomorrow.
4. Get a plan for eliminating debt in your life.
Debt impedes your progress, and it robs you of the freedom to manifest your money goals.
According to the 2013 Financial Stress Research Report, 60 percent of those surveyed under 30 reported having some financial problems. In addition, 15 percent reported being overwhelmed and experiencing high financial stress.
In order to conquer debt, you need a plan. You should write down your debts from smallest to largest. As a Millennial, you should first concentrate on paying down credit card debt.
You want to pay off credit cards first to avoid high-interest debt. Once you have paid off credit cards, you can then begin working towards paying off student loans. Paying down debt reduces stress and empowers you for financial freedom.
5. Establish a freedom fund.
This does not mean spend loosely and live lavishly. A freedom fund is an emergency fund that you establish for a rainy day in your life.
A freedom fund is truly a safety net, and in the event that extenuating circumstances occur, it gives you the ability to be at peace and not panic. Daily Finance reports that an emergency fund should have enough money to cover three to six months of living expenses.
While this may not be a realistic number for you, I highly advise you to take steps to pay down debt so you can have more money to put into your freedom fund. Keep setting aside a sum every paycheck, and eventually, you will have some safety money.
6. Sign up for a 401(k) as soon as possible.
I know this is not something everyone likes to hear, but if you want to be financially empowered, you have to invest for your future.
Setting aside money for your retirement not only provides security, but also saves you money on your current income taxes. Professionals recommend saving a minimum of 10 percent of your pre-tax paycheck.
If you make this a habit from the beginning, you will never know the difference in your take-home pay. Also, you should take advantage of any matching for retirement benefits.
We will not have the retirement funds of past generations. We must invest now so that we can truly enjoy our retirement years.
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