We are in an era where millennials are taking matters into their own hands by creating their own wealth. However, they are also the biggest spenders, forgetting that they need to save and invest as much as they earn for retirement.
Most millennials do not seem bothered about their future as they focus on their present obligations and lifestyle fulfillment. Many seem focused on the phrase “YOLO (you only live once).
While it’s good to enjoy life, it’s also better to plan for your future and no better time than the present. When something happens in the future, you will have a plan in place and will better navigate all the challenges.
It is never too late to start taking control of your finances and creating wealth. This piece explores 5 ways millennials can gain financial freedom, but first, let’s understand how to begin saving.
How Millennials Can Start Saving Money to Get a Handle on Their Finances
The first to gaining financial freedom is getting on top of your finances, and the surest way is by tracking your spending and creating a budget. This will help you analyze how much you are spending as the areas where you cut reduce to increase your savings.
The thought of following a budget gives many young people goosebumps as they feel it’s constricting their lifestyle. But don’t let this stop you, as it can also be liberating, stopping you from spending money on unnecessary stuff.
If you have no idea where to start, this article is your best friend as it will give you life-altering tips on your financial journey.
1. Analyze your income and expenses
Getting a deeper understanding of your income and expenses is the first financial planning tip for every young person. Many millennials tend to live from paycheck to paycheck, making saving or investment an impossible goal.
However, they forget that you do not need a lot of finances; you can invest with as little as $100; you just need to forgo some little expenses such as Starbucks coffee or eating out.
Start right now by tracking your expenses and creating a budget. The good thing is there are many free budgeting apps to help you, and a plus is that the softwares are compatible with my smartphones and can link with your bank account, capturing any transaction in real-time.
A budget will help you analyze areas where you need to reduce and increase on saving.
Read Also: How to create a budget
2. Start saving and paying off your debts
If you look around, many millennials are living from paycheck to paycheck. At the same time, others have resorted to credit card loans to maintain their flashy lifestyles without acknowledging the need to have an emergency fund or invest for retirement.
Like we have discussed above, tracking your expenses and creating a budget will give a clear picture of where your money is going. So, while creating a spending plan, make a point of listing your debt and come up with ways to pay off your loans.
For instance, If you are neck-deep in student loans, you can consider consolidating, refinancing, or finding other quicker and easier ways to repay, such as getting an additional job. You get to fix your bad credit score by paying off your debt, thus increasing your chances of qualifying for a mortgage at better terms or even getting an auto loan.
Read Also: How to pay off your debt faster
3. Create an emergency fund
An emergency fund is an integral part of personal finance, and every person, young or old, should have one. Emergencies do not knock, and instead of taking up loans at inflated rates to cover them, wouldn’t it be better to have money tucked up somewhere for such events.
When you have an emergency fund, you are comfortable venturing in your investment journey because you know in case of anything, you are covered for several months as you pick yourself up. So let this be your first step in creating financial freedom.
4. Get insurance
Many young people view insurance as an unnecessary luxury; thus, you’ll find that many are going through their daily activities without medical or life insurance. And in case of an illness, they pay out of pocket, which if you add up per year, ends up being more expensive than if they had purchased a premium.
Read Also: Insurance 101
5. Start investing
No one was born knowing how to invest; even the experts started investing with as little as they could afford and eventually grew their wealth. You may feel that I’m still young to start investing for retirement, but the best time to start is now. Start investing with as little as you have.
You can also consider taking up extra gigs to increase your investment portfolio, and your handwork will pay off in some years to come.
Take advantage of the employee benefits offered at your workplace; some companies match up your contribution to your pension. Take full advantage by contributing up to 15% to your retirement plan.
Other companies offer health insurance, take the money you’d have used to purchase your own, invest it in stocks, and keep building up. And by the time you decide to cash out, you will have a decent amount you can later invest in real estate, a booming market. And who wouldn’t like to own a property, whether it’s your own home or rental or just a piece of land?
Read Also:The Rookie’s Guide for Investing
Once you’ve mastered the art of investing, do not stop. Consider diversifying your portfolio to minimize your risks and increase your earning potential. There are many investment opportunities out there; you just need to want it bad enough, and while you are at, seek the services of a financial consultant to guide you through.
Don’t wait till you are in your 30’s or 40’s to start taking control of your finances. The best time is now. You may create a spending plan and fail, but the trick is not to give up.
This is because we all start somewhere, and your perseverance and commitment will see you through all these financial hurdles. So make use of these personal finance tips in your journey to financial freedom.
How is your journey to have control of your finances? Kindly share with us your progress and experience in sticking and achieving your financial milestones.