In this day and age, too much is happening with or without your input, because, well, time waits on no man. So instead of complaining or waiting around for the sky to fall, it’s better to rally around trying to get certain things in place and getting the help or support you need to maneuver through this game called life.
In the financial space, many millennials are shocked at how fast time has caught up on them as they move out of their family’s house, whether by choice or by force, and they now have to come to the realization that they have no idea how to make “good” financial choices.
Maybe, just maybe, you are the minority who has their life together and working towards their financial goals, but like the rest of us, here are some principles that may, or may not, help you. Keep in mind to prioritize and have a strategy when starting out. Begin by setting cost-effective goals and a priority list. With that being said, here are twelve tips that I wish I knew back then:
- Adopt the principles and strategy you plan for yourself
Make sure the plan is reasonable. Can’t really stress this enough. If you don’t see yourself achieving the goals you set out to accomplish in a certain time frame, I think you should re-evaluate that goal. Also, try to have someone hold you accountable for your goals.
- Try, out of the little that you earn, to save a portion of that for a “rainy day”
Emergency funds are always a good idea because you don’t know when you’ll need that extra income for a hospital bill, *knock on wood*, without having to dig deep into earnings or savings that would cause a hindrance to your goals. Additional tip: You don’t have to invest loads of money into this ‘fund’ at once, a little US $100 per month will surely add up over time. Remember, don’t use it unless you have an actual EMERGENCY.
- Pay yourself first
Invest in your education and your personal development, or try to learn a skill and improve your knowledge base so that you make yourself more marketable in your field. Gone are the days that one degree sufficed and you were at the top of your field with one certification. Learn all you can while you can. It will also help you increase your level of employment and the amount you earn in the long run. Trust me.
- Invest 20% of your income to your pension or a savings plan
Save. Save. Save. At least 20% should go to a savings plan. If you are more of an investment savvy person, then invest in bonds or shares that will give you profitable dividends years from your initial investment date (at that time, your shares should mature).
- Separate your expenditure account from your savings account
Merging the two isn’t the best thing to do in your case. In the event that you don’t have the discipline to stay above your monthly threshold, it will prove more difficult to save as the months pass. Not to mention, if you don’t keep constant track of it, it is quite easy to spend what you should be saving especially if you see a certain amount in your account.
- Protect your source of income
Keep yourself ahead of the market, which ties back to the point of investing in yourself and keeping yourself up to date with certifications, etc. which will increase your competitive advantage. Also, diversify your income streams, that way, you can have more than one way to generate income and you will be afforded the opportunity to save and spend without the stress and worry of “just getting by”.
- Give back, build goodwill
Charity and giving back is always a good thing to build not only the character but for those who are believers of helping those who are less fortunate, then it should be a principle that you should invest in. Faith, Karma, and all that good stuff are things many persons believe in, and giving back out of the goodness of your heart will build goodwill.
- Partner with people who can help you reach your goal faster
It is true what they say, that teamwork makes the dream work. Although making that decision to become partners from a business standpoint is something to look at and make the load less daunting, there are other things to consider which I know are very obvious. Weigh all the pros and cons before you decide to invest in a partnership even if the pros seem great at the time, maybe they could change in the long term.
Cover your income for a year
This point ties into saving for a rainy day because this could mean being laid off from a job or switching jobs or you have yet to be hired for another. Take this into account when saving as these savings can have a huge benefit when you are making the decision to apply for the next job and will cushion the transition between jobs financially.
- Pay attention to what is happening in the stock market
The stock market is a platform that has helped a lot of people and has been around for a while. It is just of late that millennials are seeing what their parents and grandparents were saying about investments and actually taking them up on it. Word to the wise, invest in stocks which will accumulate over the long term. No one sticks to the short term anymore, most successful people take the time to invest in various businesses/ companies, projects, or real estate which have lucrative returns over time.
- Manage your budget
Organize your spending and savings. Set a picture of where your spending goes by tracking it. Additional Tip: A credit card can be an interest-free loan, however interest is paid on the balance after a certain period of time. It is for the purpose of managing your money. Remember, do not buy what you cannot afford. Defer consumption. Ask yourself, do you really need it?
- Take out an insurance plan
Also, develop a strategy for your retirement and conduct research on policies available for your retirement as well as pension plans. You don’t know what can happen in the long run, so it’s better to be prepared financially rather than having another expense that you don’t know where the money will come from to pay for.
By Alexandra Daley