How to Plan Your Finances
Financial planning has always been a tough cookie to crack, not just by the present generations but also by those who came before them. However, millennial’s in particular are at more of disadvantage, having to contend with student loans as well as a higher cost of living.
Most millennials also have no idea how to save and manage their money properly, leaving them vulnerable to further hardships down the road. Here’s a handy guide on the best way to handle your finances according to advice from leading financial experts.
Avoid Falling into Bad Debt
Student loans are quite unavoidable for the modern millennial, affecting your purchasing power when it comes to taking vacations or buying your future home. Hence why it’s so important to deal with them straight off the bat to avoid spending the rest of your life paying them off. Additionally, some people also manage to accumulate other forms of debt such as credit card payments or car loans, which further add to their financial burden.
Get Clued Up on Your Taxes
Most people don’t really understand the way taxes work but getting a basic understanding of how much you’re supposed to be paying may help you save money in the long term and avoid paying more than you’re actually meant to.
Remember that all income needs to be declared on tax forms, even that obtained from part-time jobs.
Draw Up a Retirement Plan
Retirement planning should be taken seriously, especially by millennial’s. The way things are looking, you’ll be receiving lower social security payments than your parents as well as become eligible for pensions at a later age. This is why it’s essential to set aside an amount of money each month that should contribute towards your retirement plan.
Plan a Budget and Stick to It
A mistake many millennial’s make is their failure to stick to any kind of budget whatsoever. Moreover, most enjoy living in the present and collecting experiences rather than investments, which is fine, but it may also hinder their ability to save for the a rainy day. That $5 dollar mocha soy latte every morning could be as Instagrammable as ever but it could also be making you broke, along with $15 avocado toasts and your last ‘backpacking’ trip around Europe.
Eliminating wasteful spending and reducing expenses such as eating out regularly are tried and tested ways to stick to your budget. Cutting down on going out and enjoying low budget activities such as house dinner parties with friends or engaging in online gaming are other smart ways to save your pennies while still enjoying the simple pleasures life has to offer.
Don’t be Too Big a Risk Taker
While it’s true that a lucky few managed to make their fortune by taking huge risks that paid off, these cases are more the exception than the rule. In fact, most millionaires and billionaires have amassed their wealth by being cautious and taking well thought out decisions when it came to their finances. Smart investments such as property for example is a safe bet if you’ve got some extra cash saved up but anything else (fluctuating stocks) isn’t worth the big financial risk.
Make Use of Technology
There’s an app for literally everything under the sun nowadays and fortunately for millenials that includes money management. Apps like “ Clarity Money ”, “Digit” and “Stash” are all apps which analyse your spending patterns and recommend ways in which you can save more money each