Financial tips for money – savvy Millennials
If you are in your mid-20s to 30s and still don’t have a substantial savings put away – don’t panic! This may come as a surprise, but you are very much not alone.
And while yes, it would have been better to save and invest from a young age and enjoy the fruits of compound interest, you still have time to save enough for your future. Here we collaborated with Old Mutual to give you a step-by-step guide to get you started on that journey.
Don’t totally give in to the ‘Millennial’ mindset
There’s much evidence that Millennials and younger generations value experiences and travel over material things. Of course, there’s some sense in seeing the world while you are young, but it would be even wiser to balance a desire to live in the present with thoughtful foresight. Today people tend to live outside of their means while neglecting to save. Don’t give into that temptation. Focus on saving and working hard, and put away at least as much as you spend on non-essentials.
Draw up a budget
It’s going to be very difficult to stay on top of your finances if you don’t draw up a budget. On a spreadsheet, portion off your savings and then see what you have left. That’s what you have to live on. If this is our first time trying to save, your new budget won’t last a month unless you cut out a few expenses. First divide all your expenses into essentials and nonessentials. Then eliminate non-essential expenses until the sum of your expenses matches your budget
Use an budget app
If you don’t know where to start when it comes to budgeting, then you need to see what you spend where every month – you will probably be shocked to hear how much that daily coffee every costs you over a year. There’s a plethora of apps that will help you to track your spending. 22seven, for example, syncs with your bank account to help you see all your finances on one clean and easy to read interface.
Cut on your banking fees where possible
If you calculated everything you spent on banking fees, you’d probably get a surprise. Cut down on these unnecessary charges by using online or mobile banking services instead of ATMs or going into a bank. These services aren’t just cheaper; they’re also more convenient. By making transactions through your app and online banking, you can save both time and money. Also, if you’re not already using a low-cost bank account, read this article on how to save on bank fees and you might also see the light.
Go Green
Going green has many benefits for you and the environment. By cutting down on your electricity and water use, you will save money in the long run. If you live close enough to your work, you could also consider cycling or walking there every day. While it is a great start to practice these habits yourself, it only really makes a difference if whole households embrace them, so if you have housemates or a family, see what you can do to get them involved.
Prioritise an emergency fund
Cars break down, and pets get sick. When faced with such expenses, many people rely on their credit card or loan, when it’s a lot more cost effective and sensible to keep an emergency fund set aside for such rainy day events. This savings account should have a high interest rate (or at least one that beats the inflation rate) and be easily accessible in a hurry. This money should not be used for anything else, so that if the need ever arises, you can use the money rather than apply for a loan.
Don’t neglect your retirement savings
People tend to put off saving for retirement – there’s always something else to spend on or save money for, and planning for the golden years is the first thing to drop down the priority list. If you can relate to this, break this habit starting today. Even if you don’t open a typical retirement annuity, open an account that will help you save for the future. There are many investment options out there, so you’ll have no problem finding one that suits you. Start now, even if the deposits are small.
Borrow only if you have to
Even if you have an emergency fund at your disposal, there may come a time when you need money that exceeds the funds in that account. This is where credit or personal loans can be beneficial, but they should be approached with caution. Credit and loans should not be used for nice-to-haves or luxuries. They should be used only to pay for larger than expected emergency expenses and possibly to pay for expenses that can considered self-investment, such as education or upskilling .
Build a good credit score
When applying for a home loan, a good credit score is vital. Unfortunately, the only way to get a good credit score is to make use of credit. You already know that you need to use credit cautiously, so just remember to use it as a means to establish a good credit score as opposed to any sort of financial crutch. One way to do this is to use a credit card more like a debit card and only spending money that you actually put onto it. Or if you have a lot of self-discipline, you can set yourself a budget and make sure you pay it back every month.
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For more useful money-related tips, sign up for the Old Mutual Money Mailer. In this free monthly newsletter, you’ll receive more useful tips on topics ranging from budgeting to borrowing and everything in between. If you’ve ever wanted to know how to save for university, how to buy a used car, or how to improve your credit score, the insights in these articles can leave you wiser, wealthier, and better equipped to make the most of your money.
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