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7 Money Management Tips for Newly Employed Millennials

money management tips for newly employed millennials

So you’ve just got your first job? You enthusiastically worked eight hours a day for 2 weeks. And you are now quaveringly excited to receive your first ‘fruit’ of labor – your paycheck. You live this exciting moment as your first step towards independence and self-sufficiency, your first step toward the road of being a productive millennial of the society. And as you hold that small valuable piece of paper, your brain is insouciantly deciding on what you are going to buy first, your stomach descends through the floor, through the Earth, and somewhere far up to where you can imagine. Or as a norm, you call your closest buds to hang-out at your favorite place to celebrate this remarkable moment of your adulthood. Though it’s not a bad to do once, starting out your adult financial life should be viewed as an opportunity to create financial wellness and security for your future.

According to the 2016 Financial Health Research conducted by Financial Finesse, 58% of those surveyed who are under 30 were reported to be suffering with financial stress while over 21% claimed to have a high financial stress level. And this type of stress could lead to numerous pervasive negative effects such as anxiety, depression, over-eating, health problems, relationship issues, and many more.

But here’s an important fact to note; millennials are considered to be better educated, more ethnically diverse, and more economical than their predecessors. However, as evidenced by the research statistics presented above, millennials still confront greater difficulties – including economic uncertainties and financial fragility. Thus, it is critically important for millennials to be on a path leading toward financial security as early as possible. So this is mainly to give you some tips on how to get started on the right foot.

Quick fact: The term Millennials, aka Generation Y, generally refers to the generation of people born between the early 1980s and the early 2000s.

Tip 1: Place Your Money Where It Will Grow on its Own

As a newly-employed millennial, it is still quite ambitious to think that your money will work for you. You might be thinking of investing large portion of your money to a high-interest earning accounts which significantly have higher risk of losing track. This, my friend, is somehow unreasonable. Remember, you just started, but the good thing is you already started. So the first reasonable thing to do is to sign up to a direct deposit account where you can place your money safely. Direct deposit can have a positive effect on how you manage your money. It can reduce your temptation to spend your money.

With a physical paycheck out of the equation, you’re less likely to waste it frivolously on things you don’t need. And by setting up your direct deposit, your money could drop to a savings account which is offered by banks and credit unions.

The money in a savings account is insured by a credible insurance corporation up to specified limits. This could also allow you to squirrel away money while earning modest, low-risk returns. Although there is opportunity for larger returns with certain investments, the idea behind savings is to allow your money to grow slowly with little or no associated risk. By doing this, you’re a step closer to your ambition to let your money work for you. 

Tip 2: Stop Living Your Expensive Lifestyle

Millennials swear by traits such as pursuing one’s passion, living to explore, easy to adapt, unconventional thinker and driven. It’s common to start looking forward to experiences rather than acquisition.

Being a millennial has its unique drive that makes you want to experience almost everything, even things that can charge you a lot of money. You want to experience the so-called “TGIF” party with your friends, you lavishly visit mainstream coffee shops, and you simply want to spend your money on too expensive things that will make you look like a high-maintenance and rich individual. And now you are living your life with this mindset, “I would have a fancy lifestyle now rather than live an entire life saving for the future.” You appear a bit lazy about the future, because you are too busy enjoying the present. But remember, living beyond your means is a quick way to financial trouble – regardless of how much you are making.

Tip 3: Assess Your Priorities

When it comes to money, there’s certainly no shortage of ways for anyone to spend it – food, rent, car, savings accounts, phone plans, gifts, trips, staycations… you get the picture.

Everyone has differentiated priorities. Some believe that their most important financial asset is their own self, hence, they prioritize improving or upgrading their lifestyles, monitoring their health, seeking more credentials in life, etc. You are free to have your own priorities.

For instance, if you love travelling, you might work on a travel fund rather than buying expensive gadgets you rarely use. Always be minded that putting your money where your values lie is an important step towards effective money management. And when you prioritize something, you have to limit expenses to some other stuffs.

Tip 4: Don’t Jump onto the Bandwagon

Millennials tend to jump onto the bandwagons so easily. You have this innate desire to feel a part of something that is bigger than yourself. You crave for an opportunity to be a part of almost every journey.

If this is the trend everyone is following, you will jump in because if you don’t, you feel as though you are being left behind. Whenever you see – may be it is personal or via social media newsfeed – that almost everyone is up to something like travelling, expensive brand of clothes, etc., you will start having a strong desire to do such things too without considering important matters like your budget. This is a trap, my friend. And this will be the time that you’ll fall prey to your own desires. Don’t just go with the trend. Learn to control yourself and avoid being a broke millennial.

Tip 5: Use the 50-30-20 Plan

The 50/20/30 plan, also called the 50/30/20 budget, is a proportional guideline that can help you keep your spending in alignment with your savings goals. Just look at your income in three groups: 50% for your needs, 30% for your wants, and 20% for your savings.

Your essential expenses are those you would almost certainly have to pay like food, housing, transportation costs and utility bills. Your “wants” include your personal lifestyle expenses like your cell phone plan, cable bill, trips to the coffee shops, restaurants, etc. Only you can decide which of your expenses can be designated as “personal.” And the last portion which has the weight of 20% is for your savings – your “get ahead” category. Indeed, this rule will help you start sorting out the complicated world of personal finance. 

Tip 6: Establish an Emergency Fund

An emergency fund is the money that has been kept to cover any of life’s unforeseen events. This money will allow you to live for a few months should you happen to lose your job or if something unexpected comes up that will cost a fair chunk of money to cover. Stuff happens, trouble happens. Although it requires a pint of sacrifice to cut down some “not-so-necessary” expenses, you’ll be happy that you proactively saved enough amount when that rainy day arrives and the overall impact to your financial wellness is minimal. 

You need a set goal if you want to save money

Source: Becomeablogger

Tip 7: Start Saving for Long-term Goals

One may end up with a huge shortfall without a target in place. It’s never too early to set the stage for fulfilling your long-term goals. You might want to save now for your own car or home, to save for your future wedding, future children’s educational plan, or even to establish your own business. Have a vision and execute it.

When you build something successful, it will be a great feeling. Like when you have established your own business, you run your own show. You’ll never get fired or let go of because the security lies in the fact you are your own boss. Another good point about having your own business is that there will be something you can pass on to your clan next generation. And you can take pride because you created it. Imagine those. Visualize your goals and commit to making it happen.

These are just 7 out of the many effective strategies you can heed in financial management. So get rolling, START NOW. To increase the likelihood of achieving long-term financial independence, it is critical to start saving and investing at the earliest possible age and by starting your financial life on the right foot, you’ll be saving yourself years of stress.

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3 Comments

  1. Excel Ajah May 18, 2017
    • Emenike Emmanuel May 18, 2017
    • Abby Whitmer May 19, 2017

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