It may seem like a challenge to improve the financial literacy levels among millennials, but we have the perfect tips to get you started. Everything we discussed in part one can easily be taken care of with a little follow up.
- Once you get your first real job and go out on your own, it is tempting to feel the excitement of spending all your paycheck, and more. Don’t overspend on a bigger apartment or fancier car than you need. When you are starting out, learn the value of a dollar. It’s more important to pay off debts and build up some savings than to start a life time habit of overspending and incurring debt.
- Choose Cash over Credit
- Charging purchases to credit card is risky. Most millennials plan to avoid interest charges by paying off their balances in full every month, but as baby boomers and Generation Xers have learned, it doesn’t take much of an economic stumble to trip up that strategy. If a job loss, illness, or injury strikes, then interest on your credit card balances could pile up quickly, zapping money that could otherwise be put into savings or retirement accounts. To make sure that doesn’t happen to you, focus less on maximizing credit card spending to reap rewards, and more on budgeting and paying cash for your purchases.
- Establishing GOOD Credit
- Most millennials don’t understand how credit scores are calculated, and that could be costing them money. The better your credit score, the better your odds of securing a mortgage and lower interest rate. With this in mind, make sure you pay all your bills on time, and start a plan to lower your credit card and student loan debt so that by the time you’re ready to buy, you’ll have a better debt-to-income ratio.
- Millennials can’t do much about the length of their credit history, but they can control their track record, balances, credit mix, and the rate of inquiries. Staying on top of those categories should give your personal finances a big boost over time.
- Start Your Retirement Plan
- Contributing to retirement accounts can be hard when you’re young, but millennials shouldn’t underestimate the value of starting sooner, rather than later. The easiest way to start your retirement savings is by enrolling in your company’s 401k plan. If you don’t have access to an employer plan, set aside enough money to contribute to an Individual Retirement Account each year.
- Prepare for Emergencies
- Your on your own now and you need to prepare for what could be thrown your way. Anything can happen to your job, your health or your family. Build an emergency fund of three to six months’ of your current cash flow. This fund can help cover you for whatever unexpected may occur and will give you time to get back on your feet so you aren’t scrambling.
- CREATE A PLAN
- For millennials this is the most important tip. As you are growing up your financial life will become more and more complex. Becoming financial aware now is the best way to help remove some possible financial stresses. In order to reach your goals, you should create your first financial plan. Focus on your short-term and long-term goals. Think about priorities and the direction you want to go. Build a financial plan that creates savings goals that can turn your dreams into reality.
All of that is possible with a little financial education about the tools needed for financial organization. Some helpful apps to help millennials begin getting a grip on their finances are:
Mint – Allows users to view all their personal finance accounts on one screen. It categorizes their transactions (groceries, bills and utilities) and allows them to create their own budgets and adjust them for different expenses. It also provides users with a free credit score and sends bill reminders and alerts to them when their budget is getting low.
Level Money– Gives users the ability to plan for necessary expenses and to set a savings goal, and informs them of the leftover money they have, dubbed as “Spendable” money. The app also informs its users on how much Spendable money they have spent each month, and how much they have left to spend with a simple graphic.All the while it tracks and groups expenses (such as Ubers or groceries) month-to-month or annually
These apps are the perfect tools to get millennials started down a of financial success, but to get a complete knowledge of financial education they need more than just apps. And we here at The EDSA Group just so happen to have two amazing, interactive, online programs that empower participants to act and gain control of their personal finances. Good Money Habits™ and Good Money Habits for Students™ includes everything millennials need to have a successful financial future with interactive exercise, calculators, downloadable worksheets and test modules to install the lessons that are critical to them today.
Anyone, striving for long-term financial security can be overwhelming. For a young person just starting out, it can cause fear and stress. It’s not impossible though and can be achieved. You just need to start forming great money habits today that can and will benefit you for a lifetime.