Millennials may be achieving a lot in their lives but there is one area of concern that they seem to be lagging in: managing their personal finances. The lack of financial education among the millennial generation is the major reason for this lag. Until they are educated about it, making smart money decisions will be a difficult feat.
Majority of us are aware of the methods of making better money management decisions i.e., control unnecessary spending, maximize savings and pursue investing. However, in practice there is a huge gap between what should the personal financial management be & what it actually is.
In reality, certain aspects such as lack of education, discipline, budgeting and motivation to save, all add up to the millennial generation struggling to understand finances. They tend to then splurge on things that can be avoided and end up spending most, if not all, of what they earn in a month.
To start out smart, we recommend making a few easy changes in life for millennials in order to better manage their money.
1. Focus on inflow & outflow of money in your bank account
Once you start earning a steady income, you should eagerly work towards establishing a savings goal. This can be a retirement fund, a dream vacation or buying a property in your favorite neighborhood. This goal will encourage you to keep a keen eye on the inflow & outflow of money from your bank account. Make sure you start budgeting and actively look for unnecessary expenditures to avoid them in future. Analyze your monthly statements, high light money saving opportunities & utilize your earnings to accomplish both your present needs & future goals.
2. Control your Impulses
Splurging once in a while is not necessarily a bad thing but making it a habit certainly is. Impulsive pending can be one of the biggest contributors in deteriorating your financial health in the present & future. It is essential to control your spending by making sure you spend on things that are absolutely necessary and actively try to guard yourself against impulses. Having a long-term financial goal can provide the required motivation & determination to follow a strict budget & save money.
3. Plan your retirement
It is essential to set realistic and attainable financial goals for yourself and retirement should be one of the key considerations. Normally, retirement is something we never think about or plan towards. As a result of which, in old age we either become dependent on someone else or struggle financially in all aspects. Both of these are terrible situations to be in, especially when you are old and want to have a worry-free life. It is never too early to set up a retirement fund, so do not wait & start work towards it NOW. In fact, the difference in starting a retirement fund in your 20s as opposed to 30s can be substantial in terms of finances when your finally retire.
When it comes to finances, it always seems like a daunting task. But that is only because we lack the education about it. Starting from making little changes in our life can have a considerable impact on our financial future.
We need to be in a better position to make smarter financial decisions, and for that we should start by educating ourselves first, one step at a time!