Honestly, as a Millennial, I know we’ve got a bad reputation when it comes to finances. We’ve spent our teen years relying on our family when it came to our finances that it can be hard to manage money when you are on your own. It’s rare to find someone born in the 90’s that knows how to manage money, as a generation, we are pretty bad when it comes to managing money in general.
But thanks to the recession and the fact that we are officially now adults we all need to learn how o manage money.
Lots of twenty-somethings can land in the real world without knowing how to balance a budget, but evidence has shown that young adults behave wisely—when given the opportunity. You may think it’s going to be hard to manage money, but with the right tools, I am sure a lot of twenty-somethings will know how to manage money.
While there are a number of factors that influenced this reality, there are still a number of things this goal chasing generation can do to make sure their financial future looks bright.
Here are nine things you should understand about money in your 20s to ensure you don’t end up broke down the line.
1. It’s not as hard or intimidating as you may think
I used to think anything on finance is boring despite the fact I studied accounting. But I realized understanding finance is not as intimidating as I thought. It’s a gradual process. If you listen to finance station or programmes you may be a bit confused and it might sound boring. You have to first learn more about an area that interests you, you also will have to learn to pay attention to little things that might seem confusing at first. If you push past those initial barriers, you’ll find it a lot easier to engage in the different facets of finance.
2. No substitute for a budget
There is a difference between a written budget and a mental calculation of what you can afford. A lot of young people don’t even know how to make a budget, they feel if they can afford it, they get it not realizing that can do more harm than good. Studies have shown that’s about 40% of millennia’s money goes into discretionary purchases like clothes, gadgets, entertainment, and snacks. And while those impulse purchases may seem cheap enough in the moment, they tend to add up fast.
One step in the right direction? Create an Excel or Google spreadsheet with rows for different types of expenses and columns with time periods. Plot out exactly how much money you will have available, as well as how you plan to spend it over the next few months. Or you can try an app like Mint to help you budget, set goals, and track spending.
3. Health leads to wealth
You already know that exercise and a nutritious diet are good for your longevity (and looks), but what you might not realize is that healthy habits also translate into greater wealth.
For starters unhealthy foods and beverages are expensive. Cutting back on booze can save you a lot of money a year.
4. Save Save Save
People tend to ignore tomorrow because they are thinking of today. Saving money is sometimes an afterthought. You should have an emergency savings account of at least three to six months of your expenses, including rent, groceries, and utility bills. When it comes to retirement, start saving as soon as you can if you start contributing to a retirement account at 25 rather than at 35, you can save a whole lot more by the time you retire.
5. Take advantage of deals
When it comes to your spending, Work smarter, not harder. I know how it feels when you buy a pair of expensive sneakers and people notice that you’ve bought a pair of expensive sneakers (I know you. Wouldn’t it feel just as good if you bought the same pair, or something similar at a knockoff price? No one is saying you should buy inferior things; you can get quality stuff, for cheaper you just have to be smart when shopping.
6. Learn how to cook
You should learn how to cook if you don’t want to spend a fortune on eating out. You’ll realize noodles aren’t the only thing that can satisfy your stomach on a budget, once you learn how to cook.
7. Don’t spend too much on a relationship
I know it sounds mean, but it’s the truth. When investing in something, always have a return on investment. See what I mean? Don’t spend more than you can afford on a “relationship” that’s probably only going to last for a couple of months.