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This year has been a tumultuous one. The recession of 2020, known as the lockdown recession, has impacted 7/10 millennials negatively. Therefore, it is more important than ever to start thinking about your own money management. But where to start? Don’t worry, we’re going to share a few fundamental tips with you.
Define your goal
Defining a personal money goal to work towards is more important than ever in order to be comfortable with your financial future. When you really take the time to track your finances, you’ll find buying your morning cups of coffee and “treating yourself” to one too many pizzas starts to add up.
Unfortunately, the millennial generation is often referred to as the “lost generation”, meaning they spend their lifetimes trying (and failing) to reach their long-term financial goals.
However, this doesn't have to be the case if you become a pro at setting clear financial goals. You just have to know where you want to be, where you want to go and what you want your money to be used for in the future.
Having a goal will be the incentive needed to consider every spending decision more wisely, thus saving you money in the long run.
Some examples of goals could be:
● Paying off a loan or debt
● Saving for a lifestyle step-up (car, property, travel)
● Increasing your net worth
● Growing an emergency fund
Make a budget
The most common reason why people can’t help but live paycheck to paycheck, is that they spend without having a budget. We live in a world where we are heavily influenced by social media and targeted ads pushing for constant consumption and purchases. We don’t blame you - it’s hard not to spend it all! Your budget depends on your financial goals - you need to know where you are, to know where you want to go.
Start by evaluating your salary and monitor your essential expenses such as: rent, groceries and phone/internet. From there, have a look at your non-essential expenses like memberships or shopping. Are those memberships or shopping trips within your means? Can you live without them? Try decluttering your financial life and get rid of some non-essentials. You should have some money left over in your bank account after paying your essential expenses. Whatever is left over is your budget.
Become debt free
Debt is a very personal journey and there is certainly no one-size-fits-all solution. Debt comes in all shapes and sizes and depends on many factors. Either way, 86% of millennials are concerned about paying off loans and bills. This has been shown to affect older generations much less.
Avoiding or ignoring debts in the hope of a higher salary does not ease the situation. It builds and hovers, especially if your debt comes with high interest rates. Therefore, instead of not thinking about it, evaluate all the debt you have, figure out what you owe and how you can fit small payments into your essential expense budget. A great way to do this, is to use a payment calendar, so you have the best overview.
Once you have a payment plan set up, no matter the time frame, you will be able to track your progress and coordinate your budget better.
Try out personal finance apps
In the wondrous age of technology, there’s an app for absolutely everything. From food tracking to dating, it’s no surprise that money management apps are on the list.
In the world of digital payments, it’s easy to lose track of how much you’ve spent for the month. Everyone knows the feeling of refusing to look at your bank account balance in fear of realising you’ve spent way more than you meant to. It’s the little expenditures that we lose track of.
There are a plethora of apps available to help keep track of where your money is going such as Mint and YNAB. And of course, our very own Bitpanda Savings allows you to automatically invest in over 30 digital assets so you can benefit from the cost averaging effect!
Think About Retirement
Millenials have seen multiple market crashes and economic plights in their lifetime; this definitely raises significant apprehension about savings and the future.
There is no such thing as starting too early. A huge help can be taking stock of the plans and payments your current and past employers offered. Many people forget their retirement savings from previous employers, which is a huge reason why there is so much unclaimed retirement money worldwide. Multitask and be aware of where you saved and put all of it.
Whatever savings you may have hidden away, it’s better to keep them in a place where they won’t collect dust, but gain value and beat inflation. Pension plan accounts, savings accounts or invest to make sure your money generates more wealth over time.
Managing your money isn’t easy and there isn’t one right way to do it. In an economic climate like this, it’s important to start and to have goals, overviews, debt plans and ideas about retirement. Your future wallet will thank you.
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