One of the most alarming things about millennials and finance is the fact that the majority of them possess a horrifying combination of A) confidence and B) lack of knowledge. In fact, one survey in the UK showed that while 72 percent of millennials were convinced that they’ll achieve their investment goals, only 47 percent of them possessed some knowledge in the field of finances. This is why the vast majority of them have no investments in their 20s and 30s, and why there’s such a low rate of financial security with this enormous demographic. In order to make an improvement in this field, here are the top seven financial tips that millennials need to hear as soon as possible.
Set your priorities in the next five years
The first thing you need to do is learn how to set your priorities in the following period. For instance, the most common four priorities are getting married, paying off student loans, buying a home and advancing your career. Each of these steps requires a certain course of action and an investment of sorts. This is also why as many as 76 percent of millennials claim that they need a financial plan in order to achieve traditional milestones. Sadly, as many as 27 percent of them are unsure where they need to start, which is what makes them delay a course of action.
Plan decades in advance
One more thing worth mentioning is the fact that in order to make your financial goals really mean something, what you need to do is prioritize decisions that truly matter and start planning decades in advance. Even in your 20s or 30s, it’s not too early to start setting up a retirement fund or even start reviewing luxurious retirement properties like Mark Moran Vaucluse. If your plan is to start a business, it might be worth your while to get in the industry right away, so that you can acquire enough specific experience in the field. Keep in mind, however, that this may take years, which is why it’s important that you don’t look at it as the time that you’re being kept away from your most important goals.
Find additional work
The first thing you need to understand is the fact that the majority of people have a day job that is their main source of income. In this day and age, it would be fairly easy for a tech-savvy millennial to find a part-time job online that they can use in order to supplement their income. By increasing your income, both saving and investing will become a lot easier, which is definitely something that you need to focus on if you’re going to improve your financial status in the long run.
Start leading a frugal life
Another important thing for everyone to accept is the fact that it doesn’t matter how big is your income is if you’re lavish when it comes to your spending. What you’ll be able to invest or save is the difference between what you earn and what you spend. Needless to say, the lower the second factor gets, the more you’ll get to work with. Review your spending habits (turning to a personal financial app is a great way to do this) and try to be honest about which luxuries you can actually live without.
Consolidate your debt
One more thing worth mentioning is the fact that the vast majority of people already have some sort of debt and the fact that this debt is ruining their credit score. Keep in mind that your credit score doesn’t matter just when it comes to your ability to get a new loan. It’s also a vital component when it comes to your insurance premiums and even your ability to get employment in some companies and some lines of work. The simplest way to reduce your debt quickly, thus gaining a boost to your credit rating is to consolidate your debt. Just remember that this doesn’t actually reduce the amount of money that you owe, it just gives you a chance to focus on a single debt instead of facing several of them at the same time.
Start an emergency fund
Life is full of unpleasant surprises and in order to get ahead of this, what you need to do is be prepared. This is why you need to start thinking about setting up an emergency fund. This way, every time you have an emergency like a breakdown of an appliance or a personal vehicle, unexpected medical expense or termination of employment contract, you’ll have at least some financial insulation. In general, it is believed that the minimal amount of money in your emergency fund needs to be big enough to cover at least three months of your living expenses.
Gamify your saving experience
Lastly, there are so many great saving strategies for you to consider that can gamify your saving experience and give you a much better end result. For instance, there’s the 52 weeks saving plan where you start with a low amount of money on the first week and then increase the amount of money that you save each week by a $1. For instance, let’s say that you start with $1 on your first week. This way, you’ll save $1 on the first week, $2 on your second week, $5 on your fifth week, $13 on your thirteenth week and so on. By the end of the year, you would have as much as $1,378 in your savings account. Now, keep in mind that there’s no reason for you to start with $1 and that you can set your goals much higher than that.
In the end, regardless of whether you want to become a homeowner, create a passive stream of income, start your own business or just retire early, the sooner you start the sooner you’ll get there. In fact, by giving yourself some head start, you’ll be able to achieve your financial goals with a smaller investment. The thing about return on investment (ROI) is the fact that it grows exponentially and not linearly, due to the fact that the basis is becoming larger with each return. In other words, starting early on, even if you believe that your income is too low for such a thing, is always a good idea.