Personal Finance for Millennials is a very crucial part of the life. Your college education leads to a degree that helps you find a job, but this doesn’t guarantee a secure financial future. Why, you might ask, does this happen? The answer is simple: millennials lack the personal finance acumen to keep their heads well above water, especially when they start earning for themselves. Unfortunately, higher education institutions don’t inculcate these skills in students, so they sometimes struggle even though they have the knowledge and the experience to deal with professional life.
To make things a tad easier for you, here are 10 powerful rules of personal finance you should abide by:
Learn to Prioritize: Needs, Wants, and Savings
It is perhaps the simplest rule you can adopt. 50% of your income will go towards the essentials, including the needs that you will have to fulfill, like food, shelter, and clothing. It means you have 50% of your take-home pay to spend on yourself. Well, not quite! You should settle for 30%, i.e. spend 30% of your income on your wants, the things you want to buy. The remaining 20% should be set aside for a rainy day. It is a good idea to forget that money even exists.
Save for a Rainy Day as Personal Finance
Continuing from Rule #1, it is crucial to set aside money for a rainy day. Given that the economy is not at its healthiest, you should start saving the minute you receive your first paycheck. Over time, you will have enough money to buy a home or a car, or at the least, fund your kids’ education. Not to mention, you will have money to fall back on in case you lose your job or in an emergency.
Pay Off Your Student Loans
And continuing from Rule #1, you have to treat your student loans as a priority. If you are lucky, the amount will be manageable, but the average student debt is running into tens of thousands of dollars. It is crucial that you start paying it off as soon as you start earning. Explore your options to look for ways to pay more off in less time.
Account for Responsibilities
You are part of a sandwich generation. Meaning while working towards building your future it is likely you even have to support your parents to some extent. Be prepared to deal with all the responsibilities, as they will affect you financially.
Use Credit Cards (But Wisely for Personal Finance)
You must have thought this article might try to convince you not to use credit cards. However, with all the deals on offer, such as discounts and cash backs, it will be almost foolish not to charge your purchases. Yet, this doesn’t mean you keep charging and still spend your cash. You have to be wise. Paying off the credit card bill on time and never maxing out on the credit cards. It will help you build a decent credit rating as well.
Keep Credit Score under check
Even today, most people don’t know how their credit score works. The importance of a decent credit score has never been as great as it is today. Therefore, learn how the process goes and keep an eye on your credit score. Make sure it doesn’t fall below 650!
Seek Expert Help for Personal Finance
If you want, you can talk to a financial planner to sort things out, but thanks to technology, you have the solution in your pocket. There is no dearth of financial planning apps that you can use to stay on top of your finances. The key is to record every dollar you earn and spend. You cannot afford to lose money.
Find the Right Job
Of course, the choice of profession is yours, but whether or not you find a job is beyond your control, but there is no point in being stuck in a dead-end job you don’t like. If you don’t explore the market, you will not know what’s out there for you. For every dull, low-paying job, there’s an exciting, equally rewarding career opportunity. You don’t want to lose interest in your job by the time you reach 30, do you!
Continue Your Education
Education here doesn’t mean you enroll for a doctoral program upon receiving your degree (though you can if you want). You should invest in yourself. Seek any learning opportunity which enables you to upgrade your skills or learn new ones. In a diverse and flexible job environment, this can prove a strong point on your résume. Not to mention, you can seek multiple revenue streams if you have more to offer than just what your college education taught you!
Plan for Retirement for Personal Finance
Retirement is 60 years away, isn’t it? Well, the generation before you retired at 65, and the ones before them kept working till they couldn’t. The thing is that at your age, retirement seems a lifetime away, but it sneaks up on you. Its true time flies by in the blink of an eye. So, start planning for retirement from now. Save up, and you will have the time of your life in your twilight years.
Conclusion
These are 10 powerful rules of personal finance millennials should adhere to. Follow these steps and you are on your way to a lifetime of financial security. Keep in mind that life is an unexpected journey, you are required to follow these steps to achieve stable financial health in the future.
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