As millennials when you begin to embrace life in all its glory saving money for future is the furthest thing on your mind.
Being a millennial means having fun, experiencing an adventure or two, making mistakes and learning from those.
Most people begin living independently at this age; start working, which probably means rented accommodation, possibly a car loan maybe a student’s loan as well.
So despite all the buzz of being a millennial life is not exactly hunky dory and as much as you want to save money it gets pushed down your list of priorities.
But imagine how wonderful it would be if you could start saving money from a young age and build a nice little fortune by 40’s.
So here I have made a list of 17 important money-saving tips to guide you in managing money better along with this you can also get a free budget tracker.
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Smart Money Tips for Millennials
#1. Track Monthly Expenses with A Budget Planner
I know creating a budget may seem boring but it’s totally worth the effort. You need to track your expenses and income sources to know your spending habits.
As the saying goes it all starts with a plan, so make a note of your monthly financial goals and categorize all your monthly expenses like bill payments or groceries.
Secondly, track all your daily spending and at the end of each week review all your expenses and spot any instances of impulsive spending this can make a world of difference to your money habits improve next month.
Lastly, write down all your financial plans in this budget journal below. It is neatly categorized into pages where you can formulate your budget strategy as well as track your savings and debt. Bonus it also has pages for creating a holiday budget.
#2. Retirement fund & magic of compound interest
If you start saving early you will retire really rich, since your monies will increase exponentially with compound interest
You may have heard the term magic of compound interest but what is it actually. Here’s a simple example.
1.Say you have $1000 in your retirement account, earning an interest of 5% each year. So in your first year you will earn an interest of $50 (1000*5/100= 50) so your total stands at $1050.
2. The next year your interest will be calculated on $1050 and not your original invested amount of $1000 so you will earn an interest of $52.5.
3. So now your total stands at $1102.
4. Imagine how much you’ll earn if you keep this amount for long term say for 25 to 30 years.
Now imagine how much more you’ll earn if you keep investing a certain amount in your retirement fund each month.
This is compound interest for you in layman terms.
Most countries have a retirement plan for its citizens, where you have the provision of setting aside an amount each month or annually into your retirement fund. Do some research on this and start accumulating your wealth today.
#3. Create an emergency fund
Saving for a rainy day never hurts. Emergencies have a terrible way of surprising us when we least expect it.
Make this commitment to yourself to start an emergency fund ASAP. Each month set aside some amount for this purpose.
Tips on creating an emergency fund
- Create a goal on how much you wish to save for emergencies, say for eg $1000-$2000.
- Now automate a certain amount of your salary to go into your emergency fund every month.
#4. Keeping up Appearances
Just think for a minute whether you are living for yourself or just living to keep up appearances.
Your friend buys those strapped red leather boots that are totally lit! You really need to have one of those. So what do you do? You purchase a nice purple boot for yourself that’s even better than what your friend has.
A social media influencer recommends some high-end “organic” skincare products and you buy it right away.
You see a dress that’s too perfect but pricey, you buy it anyway, never mind the pending student loan!
In all these above mentioned situations you are living a life dictated by others.
As a millennial you are influenced social media; by what your favorite celebrity or your friend uploads on Facebook.
But most social media images are curated to sell you an idea of perfect life.
That perfect image of your favourite celebrity has probably been airbrushed. The fully furnished rented accommodation your friend just moved into was paid by her parents.
Falling into comparison and appearance trap you are just resenting yourself.
Related Post: 18 tips to Start Saving more Money every Month
#5. Ditch that Credit Card
Getting a credit card is the norm after you attain a certain age also it seems cool to have one.
But what if I said you don’t actually need a credit card. In fact I have never used a credit card, totally by choice.
I do agree a credit card may be beneficial when you handle it properly and pay your credit dues every month.
But many a times, people go overboard with their spending limit despite being tight on cash. So think if you are willing to take that risk.
If you can’t totally discard the use of credit card use it cautiously like making big purchases or during an emergency.
TIP: Before taking a credit card research about the charges, credit limit, cashback points, extra benefits or any hidden charges.
#6. Create some financial goals
Your financial goals are equally important as other goals, set realistic and reasonable targets, don’t go overboard with too many things.
Reasonable money goals for millennials
– List your all your goals like paying off loan, buying a car, travelling to a new country, saving “X” amount in a year etc.
– Out of your list select 3 goals that are your topmost priority, Do this every year.
– Allot a certain amount weekly/monthly to pay yourself. Use this amount to meet your expenses.
– Make a financial commitment of saving at least 10% of your paycheck towards priority goals.
– If you have money left after your financial commitments invest it again. In fact it’s good if you write down how much you want to save in a year.
#7. Have a loan repayment plan
When you avail a loan, its repayment consists of the paying loan plus an interest.
Before taking a loan, research where you’ll get loans at a low interest rate. Most importantly, have a repayment plan in place.
You also have the option of refinancing your loans. Refinancing can help you to pay loans with lower interest rate and over a longer duration.
Before visiting your bank make a list of all questions you have, be absolutely clear about terms and conditions offered, read your papers thoroughly before signing.
#8. Side hustles for millennials
Some extra cash flowing every now and then feels good right, especially when you are trying to live independently.
Depending on your skill set earning a decent amount each month is possible. With the boon called internet, you are never short of opportunities.
Even non-internet jobs like renting your car, Airbnbing your room, babysitting, dog-walking are equally lucrative.
Here is a long list of 40 legit side gigs that you can consider if you are trying to earn some extra bucks.
Related Post: 25 Smart Tips when working from Home
#9. Invest in Financial Education
As a millennial when you are on the verge of earning or just starting to earn take out sometime to invest in your financial education.
Learning how to manage your money is always useful, especially if you are young and have the scope of saving a huge retirement corpus.
Consider learning about investments like mutual funds, real estate, crypto-currency and stock markets.
I know for a fact Quora is a very good source for sprucing up your financial knowledge.
If you need book recommendations I found Ramit Sethi’s book “I Will Teach You to Be Rich“ extremely well-researched in money management for young people.
The author gives a thorough explanation on topics like using credit cards wisely to maximize rewards or automating accounts to save with no effort every month. If you want returns on your money get this book.
#10. Get rid of freeloaders who never pay
We all have that one friend who is always wants to have fun but never take the responsibility. Yes, I am talking about the freeloaders.
Freeloaders never pay their bills; never return the money they owe you and can’t even seem to recall ever borrowing from you when you remind them about paying back.
I have met and suffered enough of such free loaders and trust me when I say I avoid them like I’d avoid a hornet’s nest.
But the point is if you have such people in your life ask yourself if you need such toxic persons who always take advantage of you.
#11. Myth of Independent life
The charm of living independently is so exciting! Free from prying eyes of parents, unlimited fun with friends, impromptu road trips, concerts, clubbing, dining out.
But many would hate to admit living independently can be difficult even lonely at times.
You are responsible for everything – your rent, grocery, car servicing, paying utility bills, managing your money etc.
Gradually, the lure of partying all night also fades away. Many a time you might be cash-strapped.
If you are tired of living alone maybe moving back home isn’t such a bad idea or consider moving to an affordable locality and instead of living alone get a roommate to split up costs.
#12. Invest an hour each week on meal-planning
Meal planning and prepping will save you some hard-earned money which otherwise goes to buy take-outs. Every week or month take out an hour or so to create an elaborate meal plan that saves your grocery bills without compromising on the nutrition.
For my meal-planning I rely on planners and currently I’m in love with Life & Apples Meal Planner.
It comes with an extensive 52-week meal planning pages along with meal prep, shopping list, recipe card pages, planner stickers expense trackers, seasonal produce guide, a nutrients index and so much more. If you want to organize your meal planning you need this planner, saying this from personal experience.
More Useful Money Saving Tips For Millennials
#13. Cancelling multiple streaming subscriptions: Those little cable subscriptions do add up plus you’re not going to watch Netflix, HBO, Hulu and Amazon Prime all together.
#14. Brewing your own coffee: Imagine how much of that Starbucks coffee money is going to your bank account if you brew your own coffee.
#15. Tracking your credit score every six months: It is so important to track your credit score. It gives you accurate information on how much your are in debt. If you are preparing to avail a loan the first thing banks would ask is your credit score.
#16. Opting for carpooling or public transport: Not only will you be helping the environment by limiting carbon footprint but you’ll also save that fuel cost.
#17. Making cash payments whenever possible: When you part with physical cash the pain is real usually the risk with both debit and credit card is you might go overboard with your expenses.
#18. Shop at thrift stores.
Final thoughts on money tips for millennials..
As millennials managing finance on your own is totally possible; you just have to take the first step. The time is here and now. If you start early will thank yourself in the future, I promise you that.