Millennial is the name given to the generation born between 1982 and 2004, also known as Generation Y. Millennials are a generation that has experienced many changes: they are the generation that has lived the rise of the Internet and social networks, they’ve witnessed the scope of globalization, and how geographical barriers have become blurry. Millennials are also the generation with the least financial knowledge there has been; not only are they dissatisfied with their financial situation, they do not know how to improve it or who to ask for help. If you are part of the millennials and have problems in your financial control, here are 8 tips to start changing your finances for good.
# 1 Automate your savings
Open a savings account in which you can save for special purchases and short-term goals. Using automatic payment features, you can make regular transfers from your checking account to your savings account, as soon as they pay you. By automating your savings, you don’t have to overthink if you should or not save; it’s a painless strategy to focus on managing your monthly cash flow. You will be surprised how much your savings account has grown without much effort on your part.
# 2 Invest wisely
Invest wisely, don’t look for the next big thing or risk your money with promises of massive returns. Invest in a diversified way; make sure you have distributed the risk between large and small, and into national and international companies as well. Putting all your money into one thing, as promising as it may be, can cause you great losses.
# 3 Prepare for emergencies
An unforeseen event can occur in any area of your life: your job, your health or your family; an emergency fund can help you deal with any unexpected event. Create an emergency fund; try to make it equivalent to your current expenses for three to six months, so you can not only face the emergency, but also have time to recover.
# 4 Manage any new income
When you get any new income: a raise, freelancing gig or any activity that increases your income, don’t automatically increase your expenses. Instead consider how you can get the most out of this new income; either saving or investing. At a minimum, destine a percentage of this new income to your savings fund: if for example your income increases by four percent, save two percent on savings and the other two percent spend as you want.
# 5 Pay your debts
Make a plan to pay your debts; whether it’s car loans, credit card debt, or any other type of outstanding credit. In this plan always pay the debts with the highest interest first, and try to integrate this payment into your monthly base of current payments. Commit yourself to deadlines to pay off each and all of your debts. Freeing yourself from it will not only make you feel better, but it will give you the opportunity to spend without guilt.
# 6 Avoid new debts
Having access to new lines of credit can be very tempting because it gives you the opportunity to make purchases that you can’t do usually. Be very careful: all credit brings with it the cost of interest and other commissions, and if you do not know how to handle it you can enter the abyss of debt, from which it is difficult to leave; think deeply if you really need the credit, and if you will use it intelligently. Avoid new debts that are not necessary, are better to first strengthening your savings than giving into temptation of unnecessary purchases.
# 7 Save up
The most frequent cause of debt, and the impossibility of financial growth, is to spend more than you earn. Try not to spend too much on things you’re not going to make the most of: do not spend too much on a bigger apartment or a luxurious, much less if you’re not going to use them one hundred percent. It is more important to pay your debts and increase your savings than to start a lifelong habit of spending too much and getting in debt.
# 8 Build good credit
Get used to paying all your debts on time, all the time. A good credit history improves your chances of accessing larger credit lines in the future. But having good credit goes beyond being able to qualify to car or housing credit; is a factor that is taken into account when applying for an apartment or even when applying to some jobs. Also having a good credit means saving you the cost that the interests have on your debts.
Do not be afraid to change your habits,a good financial control is much easier to achieve than you imagine, you just have to decide. Whether you are a millennial or not, apply these 8 tips to your daily life and incorporate them into your financial habits, in less than what you expect you will realize everything you can achieve.