Millennials are no stranger to money stress. After all, this is the generation that came of age in the tough economy of 2007-2009.
Past money struggles still affect millennials today. An Investopedia survey of millennial money habits reveals that this group worries about meeting financial goals. Like buying a house, paying off student loan debt, or saving for retirement.
Learning money management strategies may help ease worry and fatten your bank account. Here are a few tips.
Take budgeting seriously
“Budget” isn’t a dirty word. It’s key to managing your money. A solid budget can help you spend wisely and avoid debt pile-up.
To create a budget:
1. Figure out how much money you have to work with each month. You can do this with help from the Consumer Financial Protection Bureau (CFPB) income tracker. Be sure to include all your sources of income. This could include jobs, child support, and/or government assistance.
Now, the hard part: Add up your monthly bills. Include all expenses, like housing, utilities, cell phone, food, student loan payments, childcare, healthcare, and insurance. The CFPB’s spending tracker can help you get organized.
2. Write up a monthly budget that fits the 50/30/20 rule. Essentially, you’ll divide up your monthly earnings like this:
- 50% goes toward fixed costs like rent, utilities, health insurance premiums, prescriptions, and car payments.
- 30% covers flexible expenses like groceries, clothes, and gas.
- 20% is for future-oriented goals like saving for retirement, building an emergency savings account, and paying off debts.
See if your bank offers a budget tool. You can also check out online tools that use the 50/30/20 rule. Try nerdwallet.com.
If you have to spend more than 50% on fixed costs or 30% on flexible expenses, take a look at your spending tracker. See if there’s anything you can cut. Or any opportunities to lower spending on things like clothes or your Internet bill.
Start a savings account
If you don’t have a savings account, get one. This is where you can set aside money for big-ticket items like vacations and downpayment on a car. A savings account is also a great place to store funds for emergency expenses like surprise home repairs or doctor bills.
Once you’ve got your savings account, set up automatic recurring transfers to make sure 20% of your monthly earnings make it in. By making the transfers automatic, the money will leave your checking account before you’re tempted to spend it.
Depending on your budget, it may be easier to schedule multiple transfers, so a big chunk of money doesn’t leave your account at once.
Don’t skip insurance
Medical costs may not be high on your list of priorities. However, accidents, injuries, and illness can strike at any age.
Those unexpected medical bills can be costly. And even an emergency savings fund may not cover it all. That’s why health insurance should be part of your money management plan.
If you don’t have insurance, be sure to check out your options.
Think about retirement
Retirement may be years away, but you should start saving today. Setting money aside now can give you more freedom and control over your lifestyle later. So be sure to build retirement into your budget.
There are many retirement plan options. Two of the main types include:
Both of these main account types have many different options. And each has pros and cons. It’s best to talk through your options with a human resources (HR) professional or financial advisor.
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