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A lot of the tips I’m about to share I wish someone had shared with me when I was younger.
I would have avoided a lot of financial troubles if I had been more knowledgeable about money management.
In our youth, it’s easy to not really think about our money and our future. I mean things like a 401K and planning for retirement seem so far away when you are in your early twenties.
As a millennial, you are in a great place to start making smart decisions with your money before things get too out of your control.
Below I’ve listed 15 personal finance tips that are easy and effective, whether you are a millennial, Gen X or even a senior.
It’s never too late to start making better decisions when it comes to your money and your future.
1. Start Saving
If you want to improve your finances, the first thing you need to start doing is saving money. Some people set this up automatically with their employer.
You can have a certain percentage of your paycheck deposited into a savings account.
Other people may save by signing into their bank account and moving a certain amount of money into their savings account.
You could also use helpful apps like Charlie the Money Saving Penguin to set up automatic savings for you.
Whatever you choose to do, just make a point to start saving on a consistent basis. This could be as little as $5 a week or $500 a month.
The amount will vary based on your income, expenses and saving goals. For most it will be a good idea to have a short term and long term savings account to cover different financial needs.
You may even want to have a separate bank account dedicated entirely to saving money. This way you won’t be tempted to touch those funds and ruin your goals.
In addition to saving money, it is a good idea to start keeping a budget to track your finances.
Your budget should include all of the money coming into and out of your bank account on a regular basis. Do this for a few months so you can get a clear picture of your spending habits.
A good budget guide to follow is the 50/30/20 rule. 50% of your income should cover your mandatory expenses like rent/mortgage, bills, etc.
30% is used as “fun money” for things like dining out or shopping, and 20% goes into savings.
Recently we’ve cut our “fun money” down to 15% in order to increase the amount of our monthly savings. I also personally like to keep track of our budget with a spreadsheet.
3. Cut The Excess Expenses
After you create a budget, you’ll be able to see all of the excess expenses that you waste money on each month.
Excess expenses will mean something different for each individual. Personally I consider our excess expenses to be eating out, going to the movies, attending happy hour, and random shopping outings.
Other types of excess expenses could be the cable television you are paying for or the extra services on your phone plan.
Whatever they are, make a point of cutting them out completely or at least cutting back significantly where you feel comfortable.
4. Just Say No
I’m sure we all have that friend that always likes to do something fun. And that fun thing usually costs money.
Sometimes you will just have to tell this friend “no” in order to save more money. You don’t have to say no every single time, but if it’s a month where you really need to save extra, your friend will understand.
And you should also get in the habit of saying no to yourself. This is especially true if you are someone who is an impulse shopper.
If you can’t resist your impulse urges, then try to avoid places that lead to shopping temptation, like the mall.
This also works if you if regularly eat out. Avoid the impulse to grab a bite to eat by doing things like packing your lunch for work and planning out your dinner meals in advance.
Eating out is not so surprisingly a really big expense for millennials. Most millennials prefer the convenience of grabbing takeout or ordering with UberEATS.
But eating out adds up and quickly. And most of the time we aren’t budgeting for the eating out expense.
When I first created a budget, I was shocked to learn I was spending over $100 a month on just eating out. And I can’t even say it was at fancy, quality restaurants.
Learning to cook and prepare healthy meals was a game changer for both my diet and my budget.
To do this I hopped on Google to find simple recipes that didn’t require a ton of ingredients. I also borrowed cook books from the library once I was more confident with my skills.
Cooking at home saved me more each month and I was able to start using it as a means to have friends over more, versus going out for drinks and dinner.
6. Make the Most of City Living
Most millennials are going to opt to live in the city versus the suburbs. But, city living can also end up being more expensive.
City living is fun because there is so much to do and so much of that fun stuff costs money. But you don’t need to get sucked into the money vacuum that is city living.
A couple of ways to keep your costs down are to take advantage of public transportation or even walk or bike to work if you can.
You also want to follow tips 4 and 5 above and try not to go out all the time and make sure you’re eating more meals at home than out.
Other ways to save in the city are to get a roommate so that you can save a bit more on rent and also, choose an apartment you can actually afford.
Also, look for free events in your city. Check your local newspapers, blogs and city websites to see what’s happening in your area at zero cost to you.
7. Re-evaluate Your Current Bills
Take a look at all of your automated bills and make a list of how much you are spending on each.
Then start shopping around to see if there are bills that you could either cut or switch to a new provider offering cheaper prices for the same services.
You can even call your current providers to see if there are any deals that you can take advantage of.
Check out this article for sites that can help you negotiate your current bills.
It is hard to believe that smartphones didn’t exist at some point. I use my phone all the time, especially when it comes to managing my finances.
There are a lot of apps available for both Android and IOS platforms that are designed to help you better manage your money.
There are also a lot of apps available that will help you earn money, which I get to in another tip below.
If you are new to using financial apps, here are two that I think are great to get started with:
- Digit – $5 Sign-up bonus – automatic savings app
- Acorns – $5 Sign-up bonus – invests your spare change
If your credit score is already in great condition then as a millennial you are off to a really good start.
For those of you struggling with your credit score, there are a few things you can do now to start improving your score.
A better credit score will open up more doors for you in terms of getting a loan, renting an apartment and buying a house.
To improve your credit score or to maintain good credit, you will need to do the following:
- Pay your bills on time
- Pay off your debt
- Keep your debt/credit card balance low
- Have at least one credit card
- Don’t close too many credit card accounts at once
- Check your credit score for discrepancies
- Get a free credit check report every few months to see your improvements
If you work full time at a company where you have a 401K plan, you should look into increasing your contribution.
This contribution is generally taken out by your employer directly from your paycheck and not counted as taxable income.
This 401K contribution is beneficial because this all goes toward your future retirement.
Some company’s even do a contribution match after you’ve been with them for a few years, which helps your retirement fund grow that much faster.
If you can afford it, opt to contribute the maximum amount allowed with your company so that you can earn your company’s full 401K match.
11. Seek Financial Advice From A Trusted Source
Not everyone can afford a financial advisor, but sometimes you can find advisors offering their services for free.
If you know a friend or family member that works as a financial advisor or CPA, ask to see if they’ll look over your finances at no cost to you.
They don’t need to offer their full range of services, but any advice on where you can make improvements will be a big help.
Or you can use a robo-advisor, which is basically a platform that provides financial planning resources and services.
You will have to provide banking information with these as they provide information using data driven algorithms based on your spending habits.
Having a full-time job is great for getting your bills paid and saving money, but sometimes extra cash is needed that your day job doesn’t give you.
That is when it is a good idea to seek a couple of different ways to earn passive income. Passive income is money you can earn regularly with minimal effort.
Some passive ways to earn income are:
- Passive income apps
- Taking surveys
- Affiliate Marketing
If you are in the market for a new credit card, then I would suggest you go with a credit card that offers cashback on your purchases.
Some of the top cashback credit cards for 2019 are:
- Discover it – 1% cashback on all purchases and up to 5% on different places each quarter
- Chase Freedom Unlimited – 1.5% cashback on all purchases
- Capital One Quicksilver – 1.5% cashback on all purchases
The great thing about these credit cards is that you can use them in conjunction with cashback apps and earn extra money.
Getting better at your job can lead to better job performance and hopefully a raise.
If you are looking to get a better education so that you can find the job of your dreams, check out this article on sources of FREE (or cheap) schooling.
15. Postpone Major Life Changes
Marriage, kids, owning a house, and buying a car are all things I consider major life changes. If you are wanting to improve your finances, it is best to hold off some of these.
Marriage and weddings can get really expensive and having children is also another big expense. And in today’s market, renting seems to be a better deal than buying.
Some of us just aren’t in the right place financially to commit to these big life alterations and that’s perfectly okay.
Postponing these decisions doesn’t mean they won’t happen, just that they don’t need to happen right now.
Handling your finances doesn’t have to be difficult. It all comes down to make smart decisions on a regular basis.
This will help you avoid financial hardships in the future, especially if you get on track now while you are young.
Let me know in the comments below if you’ve found these tips helpful. Thanks for reading and happy frugaling!