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This post is about 5 financial tips for the millennial.
By the way, if you have not yet had the chance to save much money, don’t worry, it is never too late to start moving towards financial freedom and independence. Just simply start today!
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Here are 5 Financial Tips for the Millennial To Adopt Easily
1. Save As Much As Possible
It can be tempting to want to buy every new gadget or item that comes out on the market. It is mentally draining to try and “keep up with the Jones’s”. Please as a Millennial, I speak to you directly and advise you to save, save, save!
Do not spend you hard-earned money on non-sense. Yes, you can reward yourself from time to time. But learn to appreciate the meaning of a dollar and how long it takes you to make money versus how quickly it can go if you spend your money.
2. You Need To Create a Budget
I’ve written about it before and I cannot stress it enough. When trying to take control of your personal finances, creating a budget is key.
You get to finally take control of your money situation, understand you spending habits, and budget for bigger expenses that might suddenly appear (have an emergency fund ready!).
A budget also helps you set and achieve specific, measurable, achievable, relevant and time-bound financial goals.
3. Don’t Accumulate Debt
There is a huge difference between good debt and bad debt.
You always want to make sure that if you take on any debt, it shall always be the “good” kind.
Good debt is essentially borrowed money (from the bank, people around you) to help you build your financial future. It could be a loan from the bank or any financial institution, to help you financially pay for education. This could be a loan that would allow you to finance your studies at college or university.
It could also mean a small business loan to start your entrepreneurship journey.
To sum it up good debt almost always gives you a return on your investment.
Bad debt on the other hand is any debt you take on by borrowing money to pay for lifestyle choices. This could be anything, such spending credit on beauty, (designer) clothes, bags, cars, vacations, etc. This ever so often comes in the popular form of credit cards.
- Read: If you are trying to get out of credit card debts, then please check out my post on “How to get out of credit cards debt fast”.
Instead of receiving interest or dividends, both forms of passive income, you are paying interest on all of these items which can be very costly. Especially, if you do not pay off your credit card amounts in full at the end of each month.
Whatever you do with your personal finances, you must never accumulate bad debts. If you must nevertheless, then pay off the loan/credit card in a prompt and timely manner.
4. Benefit From Compound Interest
Einstein reportedly said that “Compound interest is the 8th wonder of the world and he who understands it, earns it; he who doesn’t pays it.”
How can you take advantage of this as a Millennial?
Well you surely can because as a young person, time is on your side. So start at an early age, let your money work for you. Your goal should be that your money makes interest on interest.
5. Know Your Credit Score
A credit score tells a lot about your financial behaviors. It tells the bank or financial institutional (this could even be Mercedes Benz Financial or any other loan service) how credit worthy you are.
Knowing your credit score is essential when it comes to personal finance. It is somewhat your financial report card. If you have a high credit score, you are likely able to borrow money at a much lower rate. I realize that this could be but mustn’t be the case in all situations.
In North America you can check your credit score with Equifax or Trans Union. You can also visit www.annualcreditreport.com
How Do You Get A Good Credit Score?
Start using credit and consistently pay off these credits. When you are building credit it will allow you to take out a mortgage or loan for a business if you wish to do so in the future.
It would be best if you did not take out a loan at all but sometimes we just cannot save enough money in a certain amount of time.
When you do take out loans or use credit, you always must weigh the pros and cons first. If you need to then speak to a financial adviser but make sure it is someone who has a fiduciary duty.
Final Note:
Try to save as much as possible, know your credit score and start looking into investing wisely. Talk to a financial advisor if this is something you are unsure about but learning about it whether you will be a DIY investor or not is essential if you want to understand money and investing!
This post is about 5 financial tips for the millennial.