Millennial Savings refers to the financial habits formed in the 20s, a decade of self-exploration, finding your footing as an adult, and making money mistakes, often referred to as “Millennial money mistakes,” which are more common and significant than we might like to admit. Learning from these financial missteps is essential for building a secure future.
From maxing out credit cards and taking student loans to delays in savings, we all have gotten off to a rocky start. But we don’t have to stay that way till we hit our 30s. To save you from learning the hard way — we have conjured up five money lessons for you to resort to in your 20s.
Get Serious About Your Goals
TIP: Know your passions and determine goals accordingly.
Your goals could be saving up for a down payment on a home or achieving a certain net worth before 40. Identify what brings you joy and craft a financial plan to reach that goal.
Figure out how much time you’ll need for a down payment and closing costs. You do the math and then work toward that savings goal over time.
Chalk Out a Personal Budgeting System
TIP: Choose a budgeting system that works for you.
Don’t put yourself in a moment where a stack of bills overwhelms you. Even if your budgeting system is defined in its lack thereof at present, suck it up and start tracking your spending. Keep at it, don’t slack. A simple budget can work wonders if you have a lot on your plate.
But if you’re a hyper-analytical person and you want to take the high road, a detailed budgeting spreadsheet might suit you. Whatever flips your pancake. Just ensure that you account for the money coming in and going out every month.
Learn From the Past
TIP: Don’t repeat old mistakes.
Did you know if you don’t put aside enough cash to cover taxes while working a contract gig, you will have to make monthly payments to the IRS for years to come? Ignorance is bliss but not when it comes to tax obligations. If you proactively manage your budget, you can pay off your tax debt.
Also, if you have a habit of making late payments, set up an automatic bill pay so you don’t have to worry about tracking due dates.
Build Financial Stability
TIP: Make savings mandatory.
Let your past in instability be your present guide on how to deal with financial challenges that pop up unexpectedly. Focus on building an emergency fund. Everyone needs one because emergencies come without warning.
For instance, a broken alternator on your car can completely drain your emergency fund, but it will prevent you from going into debt to cover the expense. Set up automatic transfers into your savings account. Make your money lessons worth it.
Make the Most of Long-Term Investments
TIP: Use your early years to boost retirement savings.
Seize your youth and make wise financial decisions for your future. Don’t waste your long financial time horizon. Don’t neglect to save for retirement. Foresee the power of compound interest via a retirement calculator. Or just talk to someone older, they will have some pretty interesting insights to give you. So go set up regular contributions to your 401(k). Go do it right now if you have to.
