It seems more and more young people nowadays are shifting their priorities away from traditional spending and savings habits: Save for college or travel the world? Invest in a retirement fund, or attend that new music festival, out of state? Prepare weekly meals in bulk, or dine-out at your favourite hip restaurants 3-nights a week?
Smart financial choices that may seem obvious to sum, are more and more being overlooked by the younger generation, in exchange for experiences and adventure. Now, we aren’t saying this is a bad thing: some of the most important things in life can’t be purchased in a store. But, it’s important that, amongst the festival-going, restaurant-eating and plane-hopping in young people’s lives, millennials are still taking time to consider their financial futures carfully.
That’s why, we’ve complied are list of money saving and financial tips that every young person needs to know:
- Calculate how much your life costs, and live within your means. Now, this may seem like an obvious one to some, but it’s amazing how many people (and young people, especially) are living paycheck to paycheck, and dipping into savings to pay for necessary expenses (think things like rent and groceries). If you’re employed full-time, there’s no reason why you should be going into debt on a regular basis. Keep track of your spending over a daily, weekly, and monthly period, in order to determine what you can really afford to be spending, and then make sure your behaviors mirror this.
- Begin building good financial habits by changing your behaviors to help large savings goals feel more manageable. Similarly, to the previous point, improving your financial status isn’t something that can happen overnight. It’s important to take a long term approach to your money and finances, and consider not just what makes the most sense for today, but for the future as well.
If you’re looking to save a large sum of money for your retirement, it can be intimidating if you consider this savings goal on the whole. Instead, break it down into smaller more manageable goals: “I want to save $5,000 in the next 5 years.” Or, “I want to have my student loans paid off by the time I’m 30.” These smaller goals will help you feel empowered about your financial situation, and thus you are more likely to drive behavioral change.
- Pay yourself first. Payday shouldn’t mean paying off loans. First and foremost, it should be an opportunity to save money. Take advantage of automatic transfer systems offered by the bank, and set up a pre-authorized payment for 10% of each paycheck, into a special savings account. This account should remain untouched, an be reserved for emergency spending only. Before you know it, you’ll have a sizeable amount of money saved, and will be more confident about your financial standing.
- As adults—even as young adults—it’s not acceptable to not understand how taxes work. With the tax season approaching, make it your goal to empower yourself, and understand where your money is going at tax season. Many financial planners will offer a free consultation if you’re looking for help with filling your taxes. This is a good place to start, to begin to familiarizing yourself with the process.
- Compare interest rates on credit cards before signing up. Often we think of credit—and the ability to spend it—as a gift from the bank, and a demonstration of their trust in their clientele. But, banks have something very different in mind when they mail you flashy credit card offers each month. Make sure you read the terms and conditions carefully, before signing up. Already using a credit card? Consider the interest rate currently being offered to you by your bank, and shop around to see if you can find a better deal. Sometimes, banks will match interest rates being offered by their competitors, which can save you big bucks in the long term.
We encourage you to pass these tips along to a family member or friend—a more mindful approach to money and finance helps us all.
Still have questions? Contact SRG Finance today, and talk to one of our specialists today.
