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5 Spending Tips For Millennials in Your Life After 25
After recently graduating college, you’ve landed an amazing job. You’re finally bringing home a regular paycheck. Now, the realization finally hits you. You’re an adult. Because you’ve heard all of the negative connotations attached to millennials, you may be apprehensive about your financial future. Fortunately, you’re in the driver’s seat. The financial choices you make now will likely affect the quality of your life 20, 30, or even 50 years from now. So, make them carefully. If you don’t know where to begin, the following 5 spending tips are a great place to start.
Set Spending Goals
The first thing you need to do is set spending goals. These should include both short-term and long-term objectives. For instance, a short-term goal might involve making a down payment on a decent used car. A long-term aspiration may entail buying a vacation home in a tropical locale. When setting spending goals, try not to expect too much too soon. Many young people make the mistake of trying to immediately attain the same level of assets their parents have worked many years to amass. Creating realistic goals may mean making sacrifices you don’t want to make. However, these sacrifices might prevent you from dealing with a heartbreaking bankruptcy in the future.
Prepare a Monthly Budget
After you’ve set your short-term and long-term goals, preparing a monthly budget will help you achieve them. Start with your monthly net income. Then, subtract your monthly expenses. Divide annual or semi-annual expenses such as car insurance, homeowner’s insurance, or renter’s insurance by 12. Then, include this smaller amount as a necessary expense in each month’s budget. You can find numerous good examples of monthly budgets online.
Start an Emergency Fund
Unfortunately, life hands you lemons sometimes. A newer washing machine unexpectedly malfunctions. A seemingly successful company suddenly lays off a large number of employees. A health crisis occurs. Whenever these bothersome interruptions to your life happen, you need to have funds you can tap into. Therefore, starting an emergency fund early in life is crucial. This step should be taken before you save for long-term goals or begin an investment portfolio. Many people set aside an emergency fund that equals 3 to 6 months of their net pay.
Begin an Investment Portfolio
After creating an emergency fund, you should set your sights on beginning an investment portfolio. This can take the form of an employer sponsored 401(k) or an IRA. Decide what percentage of your income you want to put into retirement funds. And, stick with your decision. If you are single, this may be the best time in your life to set aside money for retirement. While retirement may seem like ages away, you’re never too young to start saving for this momentous event. Saving now might mean the difference between barely surviving and thriving during your golden years.
Attack Debt with a Vengeance
Do you look at material goods such luxury cars, recreational vehicles, or vacation homes as status symbols? If you’re guilty of this common phenomena, you might want to change your priorities. Instead of seeking satisfaction from acquiring these goods, think about how good you will feel after becoming debt free. Once you’re debt free, you will have much more discretion to eventually buy the things you’ve always longed for. If you already have credit card debt, cut up all of your credit cards. Start trying to pay off the card with the highest interest rate first. Then, move to the one with the second highest interest rate. Work hard to pay off any student or vehicle loans you may have outstanding. Lastly, you can slowly work on paying off a mortgage.
Being a millennial comes with a lot of pressure. You might feel like people are expectantly waiting for you to make a huge financial blunder. But, you can prove them wrong. Adhering to the aforementioned 5 spending tips will help you in this endeavor.
Jessica Kane is a professional blogger who focuses on personal finance and other money matters. She currently writes for Checkworks.com, a leading supplier of personal and business checks.
