Millennial money management- raise your hand if you understand it. Who out there knows what needs to be done with their money, and has a plan that they follow every day?
*crickets*
Don’t worry. You’re not alone.
Why Money is Hard Sometimes
No matter what your financial situation is, managing Millennial money is hard for us all at times. We’re in a tough situation when it comes to global finances. Let’s talk a look at some fun statistics that illustrate how hard it can be for Millennials.
-The 2016 graduating class carries an average of $37,712 in student loans
–Wage growth for Millennials isn’t keeping up with cost of living expenses
-In fact, wages have been stagnating for four decades, and the wealth gap between the rich and middle class is at it’s widest in the past 90 years
–The average period of unemployment is 28 weeks, and the longer you go without work, the harder it is to find
–A 2013 statistic from the Bureau of Labor Statistics shows only 8 percent of private companies offered a pension plan. Retirement savings is up to us.
Millennial Money Management 101
So there you have it. All the odds that are stacked against us. Low wages, a high cost of living, disappearing retirement plans, and long -term unemployment. With so many problems to deal with, who has time to sit down and figure out money management? We’re just trying to stay afloat.
Luckily, I have the time to sit down and figure it out! Because I genuinely live for this shit. Creating a step-by-step breakdown of Millennial money management is like a day at the park for me.
Even more luckily, money management can be simple. If you follow a step-by-step system like what I’ve laid out here, you’ll see the changes in your money life soon.
Grab your free Millennial Money Checklist to get yourself started. This will provide a guide for you to stick to as you chart your own financial course.
Step One: Assess The Situation
You can’t change anything without knowing what you want to change. You have to know the beast before you can defeat the beast.
The first thing to do is sit down and go over every single financial account you have and your entire last month’s spending. I’m talking every credit card purchase, every debit card swipe, every Venmo transaction. We’re going to dig into that 401k you left open at the first job you ever landed, and we’re going to examine those bonds that your grandma gave you.
You need to understand where you are. Are you spending more than you’re making every month, or are you actually already tucking away 30% of your income? Do you spend more on Uber rides than on rent? No matter what the numbers say, you need to hear it.
Use our budget spreadsheet to get your costs all down in one place.
Step Two: Set Goals For Yourself
Setting financial goals is one of my most favorite things in the world. But then again, I have seven different savings accounts and two checking accounts.
Having something to work towards makes the work easier. After you’ve done a thorough assessment of where you are financially, figure out what your goals are. You may want to pay down debt, build up savings, learn more about investments, or increase your income.
Let’s say you want to pay off debt. Rather than just say ‘I want to be debt free,’ set more specific goals. Give yourself a timeline and set a date you want to be debt free by.
More importantly, get in touch with why you want to achieve this goal. Does your debt stress you out? Do you need the money you spend on debt for other things? Are you just sick of being in debt?
Knowing the why behind your goal will give you continuous determination and fire to achieve this goal. Humans are much more likely to see success with goals when there’s an emotional component that keeps them motivated.
Step Three: Design a Plan
Lack of planning is one of the biggest reasons that people fail to meet goals or make changes in their lives. It’s understandable- if you don’t know what to do, you end up doing nothing. Assess the areas in your budget you can cut down on to free up money for debt payoff. Pick a debt payoff strategy and start implementing it.
If your goal is to pay off debt you’ll need a plan to make it happen. Fill out your budget spreadsheet and assess the areas in your budget you can cut down on to free up money. Pick a debt payoff strategy and start implementing it.
Do something every day that brings you closer to your goal. Whether it’s brown-bagging your lunch or switching to a lower cost car insurance, one thing a day will make a big difference. You’ll build the habit of following the plan and looking for ways to achieve your goal. You can both eliminate expenses and increase your income to do double damage to your goals.
Step Four: Start Thinking Long Term
Retirement savings are a must have for every Millennial. At this point, the oldest Millennials are turning 37, and it’s time to think about the future.
There’s a little thing called compound interest that is sort of like financial magic. Compound interest is interest that grows on top of your principle AND previous interest you’ve earned. The earlier you start investing and saving, the more time you have for your interest to accumulate, which means the more money you have.
Compound interest works especially well for retirement savings since we start saving long before we need to access the money. Or at least, we should start saving long before. If you don’t have any retirement savings, let today be the day that changes. Anyone can open an IRA (Individual Retirement Account) for themselves at firms like Vanguard or TD Ameritrade.
Set up monthly contributions if you can. If you can’t, open the account with as much as possible and contribute when you can. Again, the earlier you start, and the more you can contribute, the better of your retirement will be.
Your future self is still you. All the things you have today at 26 are things you’ll still want at 76. Start putting away some money today so that your future is more secure.
Step Five: Keep On Keeping On
Once you’ve established good money habits, like checking in on your accounts, setting goals and automating money towards them, money gets real easy. All you need to do is stay the course.
Start by checking off everything on our Millennial Money Checklist. Getting your money affairs in order can take time and energy, but once they’re set up you’re on easy street. Just keep on keeping on- live within your means, tuck money away into your savings accounts, think about the future, and live your life.