Millennial Personal Finances: What You Need to Know
Among the numerous challenges confronting many a millennial, one of the biggest and most intimidating is the inability to manage finances. Studies have shown that millennials find it challenging when it comes to issues surrounding their personal finances. They also struggle when it comes to stocks, interest rates, savings, and mutual funds.
While it may seem self-inflicted, the education system in America is not helping matters. Studies indicate that less than 17 states allow their students to study a course on personal finance in the high school. The consequences are far-reaching.
However, there’s good news. You can easily learn about personal finance in many other ways. If personal finance has not been your strong suit, there are some simple ways you can stay on top of your money as a millennial. Read on to know all you need to know about millennial personal finances.
1. Regularly Check Your Finances
Regularly checking your finances is possibly the most important fact you’re going to learn today. Don’t check your account today and wait for the next 7 days before you check it again – it needs to be done daily. Whenever you ignore your account for a couple of days, you could end up spending more money than you know. You’re also at risky of missing fraudulent activity.
The first thing you need to do to take proper care of your personal finances as a millennial is to check your accounts each day and understand how you spend money. With so many budgeting apps available, it becomes much easier to track your finances. You have all your savings and checking accounts at your fingertips and can get up-to-date numbers at any moment. It’s much easier for you to make smarter spending decisions when you can see how it effects your account immediately.
2. Sign Up for a Free Checking Account
There’s no point in spending a lot on bank fees on a yearly basis. You can save money meant for annual maintenance of bank accounts or invest it into profitable ventures. The average checking account has several charges which could add up over time. There are standard charges, monthly ATM maintenance fees, and monthly service charges to consider. However, you can avoid this because there are some banks that offer free checking accounts. Statistics show that four out of ten banks will offer you free checking accounts.
This implies that you won’t have to worry about service charges or balance requirements. It’s even getting better as more banks are offering online-only banking services with checking accounts that have no ATM charges or overdraft fees. Overdrawing your account regularly can result in paying hundreds of dollars charges yearly.
You don’t have to work with sentimentality on your checking accounts. Get a bank with lesser penalty, subscribe to it, and don’t look back.
3. You Can Build Credit Without Using a Credit Card
It’s possible to live without credit cards which makes it easy to avoid accruing debt and interest on your payments. But it’s hard to turn away from the convenience of a credit card and, if you can’t, you need to be smart about how you use it. Make sure you pay off your debt immediately or as quickly as possible.
4. Find Ways to Reduce Your Regular Expenses
It may seem difficult trying to cut down on your expenses. While everyone has expenses, you need to be careful about what you spend your money on – there are preventable expenses. Spending money is fine but spending excessive money on wants such as entertainment and leisure may be a problem. Take a critical examination of your spending habits and see where you can possibly cut down on expenses.
5. Start to Build Credit
You’ll find having a good credit score useful and necessary even if you’re not ready to apply for a credit card or loan. You can use a good credit score for other transactions such as getting a cell phone service in your name.
6. Make Contributions Towards Your Retirement
As a millennial, you might have the firm belief that you’re far from retirement. Yes, that is true, but you need to start preparing for your retirement now. The fact that retirement is still far should encourage you to start making contributions towards it. Set aside a small percentage of your income monthly for decades and leave it to accumulate huge interest for you in the future.
Starting now is the best time to save money because it’ll have time to grow and accumulate interest, thereby giving you much more money when it is time to retire. Waiting to put money into a retirement account until later in life limits how much interest you’ll accrue on your account.
7. Enroll for Courses on Personal Finance and Financial Literacy Online
As millennial, you probably have a strong understanding of technology in comparison to older adults – you grew up with it all around you. It’s a great idea to enroll in online courses on financial literacy and personal finances. There are also courses on basic economics, capital markets, accounting and capital markets.
Online platforms such as Udemy and Alison are great places to check out. Some of these courses are free while other paid ones are very affordable. They’re usually flexible, fun, and have excellent delivery of the information. They’re the most effective way to have relevant knowledge about personal finance.
8. Search for Passive Income Opportunities
It’s unfortunately, there isn’t real financial education in conventional schools, as we mentioned before – which puts you behind the eight ball when it comes to setting yourself up for the future. Sadly, many parents fail regarding teaching their children how to many their finances. You’ll get more satisfaction by learning how you can make your money work for you without your active participation. You can put your money into high yielding investment accounts and get massive income in returns.
9. Get a Trusted Mentor
There’s so much information on the internet today about finances and investment. Sometimes, there’s so much information that it can become overwhelming. It’s beneficial to have someone you trust so you can pick their brain and understand what you’re reading. With a mentor, you’ll get reliable information, tips, ideas, suggestions and feedbacks on your exact needs.