Millennials are stuck in a weird financial situation.
Currently, Millennials are between their mid-thirties and late teens. This is the age group that commits reckless behavior or is in the beginning stages of buying a house and excelling in their career.
We’re at the point where Millennials should start investing. Our consumerism society makes it easy to spend money. Trends such as crazy food, fashion, technology, and travel can eat away at your bank account.
Living the luxury life isn’t wrong — you have to share something on your Instagram, right? But there are ways to develop good savings habits so you can do more fun things during these crucial moments in life.
Here are some wealth planning tips, specifically for Millennials.
Stop Going Out So Much
Millennials are at the party age. This is a common age group where you want to drink and have a good time. Even though our parents give us the judgmental glare, they can’t deny they went through the same phase, too.
But party days are no longer rummaging through your parents’ liquor cabinets or buying some alcohol at the nearby liquor store.
Millennials want to go out. They want to drink fancy cocktails. They want craft beer. They want wine and specialty food.
All of this adds up, and you’re left with an empty bank account and bad wealth planning.
If you want to save money, you can agree to hardest part about saving is saying ‘no’ when a friend asks you to join them at a brewery or an expensive cocktail lounge.
This doesn’t mean you can never go out. But limit the number of times you go out.
Instead of going out every weekend, make a day once a month to go out with friends. Or save going out for special occasions, such as a birthday or other life event.
Don’t Buy the Latest Technology
Once Apple and other major tech companies announce the new iPhone and other gadgets, Millennials flock to the store to be the first ones with the gadget.
And phones aren’t the only gadgets. Video game consoles, games, tablets, and smart TVs are perfect examples of expensive tech that Millennials completely eat up.
But this habit can ruin your bank account. However, there’s a difference between an investment and a novelty purchase.
Say you have an older smartphone that’s starting to decrease in quality. It loads slow, the battery dies quickly, and you’re unable to properly use your apps. Therefore, it’s time to buy a new phone.
But rather than splurge on the latest phone, you’re wealth planning. You take about six months and save for it.
Or, you lease the phone through your cell phone carrier. This way, a small charge is added to your cell phone bill and you don’t have to put down a lot of money.
But you don’t have to buy the latest gadgets when they’re immediately released. You’re putting down a lot of money at one time, resulting in a low balance bank account or risk of being in debt.
Get in the Habit of Actually Saving
While cutting down on expenses is great advice, Millennials need to be taught wealth planning. And once you do, this habit will come naturally.
Start by saving $20 a week. By the end of the month, you’ll at least have $80. After a year, you’ll have about a grand saved.
Don’t have $20 each week to save? Start saving some loose change. Even putting away 50 cents a day equals almost $100 in your savings.
Building a savings account doesn’t require several thousand in the bank. Even an extra $500 will prepare you for a dire situation and an unexpected expense.
Depending on your bank, you can set up automatic savings that transfer a certain percentage of the money in your checking to your savings.
But if you want to start saving for your future and for retirement, you need to really be responsible.
Open up a separate retirement account. Invest in stocks or bonds so your savings can accumulate faster. If your employer offers retirement savings or a 401k, take advantage of those benefits.
And whatever you do — don’t touch that money unless you retire. Consider opening a special account that charges you a large fee if you take any money out.
Saving money can mean having a small savings account or a retirement account that will last you a lifetime. The most important thing to do is save money, regardless how you do it.
Make Smart Purchase Decisions
It’s inevitable — you’ll have to splurge occasionally.
Even when trying to save, the burden of Christmas presents and birthday gifts is still upon you. Even small purchases make an impact; how often did you forget to go to the grocery store and opt to just eat out?
But when you do splurge, make the most of it. Meaning, be smart about your purchases. Making impulse and last-minute spending decisions could leave you in debt. Instead, think of purchases that matter.
For major purchases, such as buying a car, make sure you research the car and test it out. Don’t settle for the hot sports car — buy a car that will last you years.
Be sure to understand the lease, your interest rates, and if the new car will affect your insurance.
For smaller purchases, make sure you’re spending well. Meaning, don’t buy clothes unless you need to. A perfect example: say your new job requires a certain dress code and you don’t have many clothes in that category.
When going out to eat, avoid appetizers and upgraded side options. Only eat out at nice restaurants during special occasions.
Time to Get Better at Wealth Planning
With the way Millennials are spending, it’s easy to be broke or fall into debt. Make smart purchasing decisions and start saving.
There are many money saving options that create a rainy day fund and helps prepare you for retirement. The longer you procrastinate to save, the harder it will be. Start saving today and be prepared for anything life throws at you.
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