Financial Skills for Millennials

Financial Skills for Millennial

In 2020, the millennials will be 23-38 years old and will reach a crucial stage in life. It will be the peak time in their career and major life events will take place like promotions, marriage, children, travel abroad, and higher studies for some whilst paying student loans or heavy EMIs for big purchases like a house or car.

The millennial generation has completely different aspirations and lifestyles from their predecessor generations. Therefore, the solution to their dilemma of managing finances is also different. Here’s what can help:

1. Gain financial literacy:The term “Financial literacy” might sound elusive but it’s not all maths and accounts. Knowing your finances will help you in effective decision making as well as enhance your financial planning techniques and debt management. Learn about options that will help you save money and investments that will help you achieve your goals. Make use of technology to find out about techniques that will save your money and track your expenditures.
2. Build a budget:Various studies on millennial spending habits outline that they are influenced by their peers and social media when it comes to spending or investing. On the contrary, your expenditure and investments should be completely based on your goals which differ from person to person. Create your own budget, stick to it and cut down on emotional buying (honestly, this will help you save a lot). Your income should be divided as 50% on needs, 20% on wants and 30% on savings.
3. Invest in plans which suit your goals the most:Millennials like to live life in the fast lane. Most of who live recklessly from paycheck to paycheck while pursuing an extravagant lifestyle with superficial goals causing financial distress. You need to set your priorities straight and decide where and how much to invest. Make a plan that encompasses your long term financial goals (marriage, property, etc.) along with your short term goals (vacation, vehicle, etc.). To gain more clarity on investments attends our session on “The Financial Well-Being”.
4. Borrow less, save more:There is a vicious cycle of borrow-and-spend in our life where every month we think this will be the last time but fail every time. Be it borrowing from our friends and family or the worst- credit cards and loans we resort to whatever is available. The interest we pay is like the monster under our bed we were scared of in our childhood (except interest is real). If you want to save money refrain from taking loans and cut down on the usage of credit cards. Try to avoid borrowing as well.
5. Retirement plan:It’s never too early to think about your retirement. Start saving for your retirement at the earliest as it gives you more time to save and leaves you with a hefty amount for your future goals (didn’t you plan a world tour?). Don’t wait to repay your debts and fulfill other responsibilities before you plan your retirement. Make a retirement fund as soon as you start working and promise yourself to not use the money in emergencies.