We cannot predict the future. Life, as many have stated time-and-time again, just happens. In fact, if we could go back in time, we would certainly do things different. For many college students, they do not necessarily comprehend the sever ramifications that student loans, credit card debt, and other necessary obligatory expenses such as rent, car payments, and even living and social expenses have on your savings. But it is not too late. While you cannot turn back the clock, you want to make sure you establish a strong holistic understanding and financial strategy to gradually build your savings and investments into large sums.
Keep in mind, the ability to save is a process. Accumulating a strong financially healthy wealth does take time. While it may not be able to see the immediate results within just a short period of time, you want to make sure you do your due diligence and establish that plan so that you can reach your financial goals.
Below, I have provided five financial tips that every millennial must take advantage of. These helpful tips will establish that necessary path and secure your future for the better.
- Establish your Financial Goals
It is important to think long term when it comes to saving your money. As much as you want to enjoy it, you cannot be too frivolous and careless with your cash. To do this, it is absolutely imperative that you plan with a goal in mind. Like anything in life, you want to make sure there is some type of positive end result. Similar to that, with your financial situation, you want to backwards plan and establish short term and long term goals in order to build a strong and viable financial plan. By having these goals in mind, you will be able to anticipate for any future cost and set tangible and logistical objectives of what you can and cannot spend at a given month. Certain goals can be the following: housing, car purchases, big financial purchases, vacations, educational cost (graduate school), or even retirement.
- Begin retirement planning immediately.
The biggest mistake many millennials make is that they do not take advantage of the benefits of their first job. Some come in with the mentality that this position is short-term and temporary. Others believe in waiting until they are officially settled. While it is important to feel secure, you want to make sure you leverage those financial packages to your fullest. In addition, do not be frivolous with your paychecks. Getting your first paycheck can be exciting. But it does not give you the right to spend it on any and all desires. Instead, think of your financial future. Start building your wealth so that you can be financially stable in the long run.
- Build Up an Emergency Fund
As a young professional, you will accrue many expenses in your life. Within three months, you have enough understanding of your net income, expenses, and savings. While it may be difficult, make sure you establish an emergency fund for those worse case scenarios. At the end of the day, we cannot predict the future. Because of that, you want to make sure you are prepared for any and all hiccups life will throw at you. To do this effectively, create an emergency fund that covers at least six months of living expenses. This sum can be used for a variety of situations such as job loss, career transitioning, car expenses, medical expenses, etc. Remember, it is all about putting your mind at risk. The worst thing you can do for your future is by finding yourself in a situation where you are unable to pay the bills. The emotional time and financial burden can absolutely be alleviated if you have this plan in place.
- Stay Consistent with your Savings
This is probably one of the most important steps you should understand. It is also the most difficult. As a millennial, the world is at your fingertips, you will have a vast amount of opportunities to travel and buy all the things you want. But as great as those external factors may be, they are, in it of themselves, incredibly costly. When it comes to your personal savings, you want to make sure you are staying consistent. Consistency will be the key factor in where you will financially stand in the future. Remember this, material items won’t be able to pay your student loans. Be smart about your money and stay consistent.
- Create a Plan
When it comes to personal finance, you want to make sure there is a plan in place. To help you with this, try establishing the ‘50-30-20’ rule where 50% of your revenue goes to any external expenses, 30% goes to your savings and retirement plan, and 20% goes to your social expenses. By establishing a strategic plan for your money, you will be able to take control beyond the sea of bills and expenses and foster the groundwork need for your future.