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Most millennials don’t have to take full responsibility for their personal finance management until right after graduating from school. Then, in a flash, they are faced with the reality that they alone are accountable for the choices they make about handling their money. Does this mean that young adults can’t avoid getting into financial trouble?
With the exception of business school students, most young people don’t focus on educating themselves about financial literacy. Additionally, there is a large number of graduates raised in homes where money management was not a topic of discussion on a regular basis. But not all is lost by a long shot.
It is absolutely possible to enjoy life as a young adult and practice wise personal finance management at the same time. ~ Sheila Kay
Millennials consist of smart young adults in their 20’s and 30s that want to make the most of their cold hard cash. They are also eager to take advantage of opportunities to learn ways to meet the challenges of financial management. They daydream of a future that includes home ownership, money in the bank, world travel, and other signs they have made the illusive “it”.
Track every penny that goes in and out each month. This means making a list of all expenses for at least 30 days. Not just bills, but all the extra expenditures from entertainment and shopping to the daily cup of Starbucks deliciousness. It is important to include everything in order to get a true financial picture.
Make savings a no-compromise priority. No matter how small the amount, savings should be included as a monthly expense.
No more living paycheck to paycheck! Set goals to curb even one wasteful habit a month, no matter how insignificant. It can make a real difference and free up money to save.
Make a commitment to improve financial literacy. This step looks different to every individual. For some, it may simply mean being more focused on their spending and saving. Others may feel the need to supplement their knowledge by taking online courses or reading up on the subject of finances on a regular basis.
Millennials and older adults should familiarize themselves with some tools that will help with cash flow management. Free resources that help people make sense of all aspects of personal money management are readily available for the taking. Examples of popular programs are Personal Capital, Quicken, and Mint.
Young adults can take comfort that time is on their side, and not just with regard to their looks and health. They have years to master the learning curve and create the financial lifestyle they desire. However, it is the wise millennial that chooses to start sooner rather than later so in the future they can have financial comfort while they’re still young enough to enjoy it.
Fiscal responsibility has a ton of moving parts which take time to learn to manage. The most effective way to deal with personal finance is to keep things uncomplicated. Millennials with the most success start with establishing the basics and expanding from that point. This strategy can be as simple as:
Trying to maximize all aspects of funds management right at the beginning only leads to frustration and disappointment. The key is to lay a simple foundation upon which to build later after time and experience kicks in.
Nothing impacts finances to a greater degree than how credit is managed. For better or worse, a credit score influences the end game of any money scenario. Bad credit does not discriminate, however. Millennials are certainly not the only age group that knows the pain of high interest rates and application denials. The many benefits of good credit are also enjoyed by adults across the spectrum.
Major financial actions that are affected by credit scores:
Each of these are important financial concerns. Poor credit can result in unfavorable consequences like credit application rejections and paying very high interest. Good personal finance involves checking credit scores regularly to stay on top of things. Those scores will stay reasonably good if consumers avoid taking on more debt than they can afford.
Millennials and consumers of all ages must take the option of missing a payment off the table entirely. Paying bills on time should become a lifelong habit. The objective is to protect good credit at all costs. And if credit is damaged, it is imperative that an aggressive effort is made to turn it around. Because in the world of financial responsibility, credit reigns supreme.
Even with information and tools readily available, young adults will need the help of others along the way. Being an adult does not mean they are expected to know everything and be able to implement any knowledge with precision. Instead, successful millennials reach out for advice, accountability, and support as they work to manage their personal finances effectively.
Financial experts suggest that young adults choose someone they trust to be a mentor. Parents, former teachers, family members, and employers are more than willing to share their experiences and offer suggestions for overcoming roadblocks. When wise counsel is implemented, the millennial becomes confident with money management. Over time, they find themselves in the position to help other young adults that are just beginning to navigate the waters of personal finance.
In one recent study, over forty percent of people between 18 and 19 were extremely unsure about the state of their current and future finances. Well over half of the participants experienced stress about money.
Promising statistics have been published which conclude that millennials actually outperform their parents and grandparents in making good financial moves. In part, this is because of advantages they have in the form of more time to accomplish their goals and availability of superior resources.
The main take-away is that, clearly, young adults have the ability to achieve a high level of personal finance success.
