Millennials are becoming increasingly concerned about financial management, with their main focus being earlier financial independence and retirement without huge debts. Today, you can find many credible sources that provide strategies for keeping track of your finances, which covers managing debts, among other financial obligations.
If you’re a young professional seeking modern and revolutionary ways to secure a debt-free future, this guide is written just for you. This article will cover saving, investing, budgeting, and credits, among other money matters you should know.
Practice a Debt Repayment Strategy
Many try to avoid debts, but some circumstances call for credit products like student loans, auto loans, credit card loans, mortgages, and others. Some resort to unsecured personal loans from legitimate digital lending platforms as quick, convenient sources. Once the application has been approved, there is a personal loan origination fee to pay on top of the interest rates installment.
If you have multiple loans to manage, consider developing a debt repayment strategy. You can try the Debt Avalanche Method or pay the loans with the highest interest rate first. You may also practice the Debt Snowball Method, which involves paying off credit from smallest to highest amount. If you have multiple credit cards, pay them off in full every billing cycle.
Create a Spending Plan
The foundation of a solid money management strategy is a sound spending plan. This involves identifying which expenses to prioritize and which ones are discretionary. It’s important to also identify which expenses you can cut costs on.
Before dedicating your paycheck to everything that is listed on your spending plan, make sure to pay yourself first. This means routing money to your savings account before anything else. Remember to reward yourself. Dedicate a portion of your paycheck to spend on what you want, to compensate for your hard work and dedication.
Build an Emergency Fund
Life is full of unexpected twists and turns, this is where an emergency fund comes in handy. This means having a separate high-yield savings account where you can deposit fixed or irregular amounts of money every time you receive your paycheck. People usually save 10% of their income towards their emergency fund.
You should maintain at least three to four months’ worth of living expenses to ensure you can survive if anything urgent needs to be financed, like a car breakdown, major house repair, losing a job, or a health emergency.
Do Not Spend More Than You Earn
Delaying gratification is the key to a more abundant tomorrow. To start off, identify your needs and wants. Prioritize things like saving and investing before anything else. We may be living in a world full of instant gratification, but remember that some compromises will yield a better financial future for you.
If your salary increases, instead of upgrading your lifestyle, try to increase the portion you allocate for savings. If you badly want to buy something, wait for 24 hours before deciding on the purchase.
Maintain a Good Credit Score
Your credit score is an indicator of your financial health. It will be difficult to rent a place, apply for a loan, or get a job with a poor credit score. Make sure to regularly monitor your credit score reports and immediately resolve any errors and disputes.
Pay any financial obligations before the due date since falling behind schedule will tarnish your credit score. Building a good credit score will take time, but it will be all worth it.
Find a Secondary Source of Income
With their diverse range of skills, millennials are born to be hustlers. Consider capitalizing on these skills by taking part-time jobs. Even though you feel content with your full-time job, an extra source of income can help you quickly achieve financial security.
Besides side hustles, consider diversifying your investment portfolio. Check out other investments you can try. You may also consider starting a business if you have a flair for entrepreneurship.
Review and Modify Your Financial Plan
Your financial blueprint isn’t a one-time thing. You must regularly review and adjust it as necessary. Factors such as salary increase or decrease, financial emergency, or change of address could contribute to modifications in your plan.
Final Thoughts
Many believe that millennials are a generation of go-getters. Besides being known as hustlers, the group is also branded as individuals who live from paycheck to paycheck. If you want to break free from this conventional image, follow the tips shared in this guide!
Also read: 5 Tips for Using Payday Loans Responsibly
