6 Financial Tips For The Savvy Millennial
Out of touch with reality -- the phrase used to describe millennials ALL the time.
While we may be obsessed with tech and love experiences over buying things that our parents swear bring “stability,” we aren't exactly out of touch with the “real” world, as the generations before us know it.
The savvy millennial these days understands finances are just as important as they always were, even though we have new ideas about the topic.
So, for all of you savvy millennials out there who want to continue dreaming of your new startup business, long-term travel, remote work and passions, here are some financial tips to keep in mind.
1. Have A Plan For Student Loans
Unlike most of our parents, we have an insane amount of student loan debt. What's even scarier than the thousands of dollars of debt is the lack of understanding that most college grads have of it.
In fact, Citizens Bank did a survey this year that showed 45 percent of grads didn't know how much of their salary was going toward payments.
Another 37 percent of people didn't know what the interest rate on their loans were, and 15 percent of grads didn't even know how much they owed.
OK, please don't be like the people in this survey! Understand all of your student loan details and then make a plan. Yes, it may involve a little bit of math, but you should figure out how to wipe out your loans the quickest way possible.
Try overpaying while targeting the loans with the highest interest rate, or get a second income stream and dedicate all that money toward repayments each month.
2. Always Pay Yourself First
Through the past couple of decades, this bit of advice has been offered by financial advisors as something to live by.
From Tony Robbins to Napoleon Hill, these success stories in personal finance all are fueled by paying yourself 10 to 15 percent of your income before putting out money for any other bills -- rent and debt included.
Put this money in a separate account and save it for a rainy day or emergency.
3. Understand The Deal With Insurance
The bills start to pile up after graduation, and it can be tough to understand what you need to pay for or how it's actually helping you.
Insurance is a huge cost for millennials, from car and health insurance to life and home insurance. There isn't much guidance for many of us, and the rules always seem to be changing (looking at you, health insurance).
Can we get insurance if we have preexisting conditions? What is a typical co-pay supposed to cost? Lacking answers to these questions, we often spend more money than we have to on insurance.
Plus, as many of you are deciding to open small businesses, these matters become increasingly more serious.
4. Watch Out For Credit Card Debt
You don't need as many things as you think you do -- especially if you don't have the money to pay for them.
It can be tempting to buy things you want or think you need and just worry about paying for them later.
Also, we are constantly told by our parents we need to be building credit.
The whole credit thing isn't a myth, but you need to be careful not to rack up debt that could potentially ruin your financial life.
Pay off your bills in full each month before any interest can accrue, and you will be in pretty good shape. If you can avoid using a credit card altogether, it wouldn't be a bad idea.
5. Don't Stay In Dead-End Jobs
If you have a college degree and a couple of skills, staying in a dead-end job just doesn't make sense. According to the Millennial Mindset Report, 57 percent of surveyed millennials say not making enough money is their biggest problem.
Even if you have to go into an entry level position doing something that is completely irrelevant to your degree, it will probably get you further than keeping that barista gig at the local café.
Be aggressive when it comes to your money and your career, and don't get sucked into the black hole that is a dead-end job.
6. Invest In Yourself
If you really want to improve your career and your finances, the best thing to do is invest in yourself.
This won't be investing exactly as you know it, but instead an effort to invest in your education and skills.
Put aside some money to take classes, go to workshops, read books and magazines or do unpaid internships in order to gain new and marketable skills.
There are plenty of ways for you to find teaching tools, sometimes at no cost to you. Build yourself up if you want to be valuable in the workforce, and then use what you have gained to earn a better income and financial future.
A sound financial future is just as important today as it was for the generations before us. Don't get caught up in all of the millennial trends and, instead, think logically and look for ways to make your future even brighter.