Your finances dictate how you live, where you live, and the things you do. Since it is so essential to living fully, we have curated the best financial tips for millennials. This article will set you on the right track towards being in charge of your financial future. Whether you are just starting or you are an expert, you will find it valuable.
1. Know your credit rating
If someone asked for your financial report card, what would you present? Your credit score is a numeric representation of your financial attitude and aptitude. To get a pass mark, you need a score of 700. Millennials with over 750 are exceptional. Hence, know where you stand financially. This can be a huge help when it comes to taking on credit via guaranteed payday loans and other types of similar short term finance.
2. Be Clear About Your Debt-to-Income Ratio
Your debt-to-income ratio (or DTI) refers to the percentage of your monthly income that services your expenses and liabilities. Income covers money from salaries and wages, side gigs, tips, and gifts. When you know what goes out and the balance, you can decide whether to find another income source or downsize your lifestyle.
3. Always start with a budget.
Change your perspective about budgeting. Many people see a budget as a punishment to live a miserable life. A good budget is an essential tool that empowers you to track your income and expenses. Also, it allows you to build wealth and live life on your terms. Moreover, tie your budget to your financial goals.
4. Dedicate some funds to an emergency account
Learn to save. Every personal finance classic mentions this strategy. However, go beyond savings to funding an emergency account. No one is immune from emergencies. For instance, the loss of a job or a loved one is a common exigency. When such predicaments occur, you can count on this fund.
5. Begin investing right away
If you start investing today, you would have saved and made more money than if you start next year. Experts have highlighted the principle of compound interest as the eighth wonder of the world. You gain interest in the initial principal and the interest that it generates. That way, you can hit your financial goals faster.
6. Manage your credit card debt
Millennials spend tomorrow’s money today via their credit cards. Although incurring this debt is easy, paying it off is challenging. The reason is not farfetched. When you carry over your credit card liabilities from the previous month, you pay interest on it. Add that to the current month’s purchases, and it becomes gargantuan. According to Sallie Krawcheck, Managing Director of Ellevest, ensure you settle your credit card liabilities before they get out of hand.
7. Use personal finance apps
In the 21st century, you cannot afford to be financially illiterate. There are numerous mobile applications on the Play Store and App Store that provide quality financial education. For instance, there are apps for budgeting income, tracking expenses, intermittent savings, and investing. Besides, you can use them anytime, anywhere.
8. Speak with a financial advisor
Personal finance is a critical field that requires expert advice. Getting the right advice early can prove to be a lifesaver. Rather than waiting till you are in your forties or fifties, schedule a visit to a financial advisor now. Do your research to find advisors that you can afford. Discuss your financial goals and salient areas like marriage, studies, mortgage, and how they will affect your finances.
9. Calculate your net worth often.
Do you know how much you are worth right now? Take an inventory of all you own, including your income, savings, properties, and investment portfolios. These represent your assets. Then, make a list of everything you owe, including your expenses, credit card payments, and debts. These represent your liabilities. Your assets less your liabilities is your net worth.