Spending habits can help shape your success as a self-disciplined, forward-thinking innovator who favors financial security over instant gratification. The good news is millennials who aren’t living paycheck to paycheck are slowly making progress to their savings solution; sources report, 1 in 5 millennials have between $10,000 and $50,000 in their savings account.
The question is how to budget while still spending and leaving room for flexibility and priorities. If traveling is important to you, focus on saving for your next trip while decreasing another variable area, like clothing or entertainment. Wherever you decide to spend your money, the most important thing is to create and keep a budget. It could mean the difference between financial empowerment and guessing that things will somehow come out alright.
It turns out the majority of millennials are already budgeting. According to the Bank of America 2018 Better Money Habits Millennial Report, 57% percent of millennials are budgeting, challenging the generation’s reputation of not being on top of their finances. If you want to join the trend, here’s a breakdown of how to approach budgeting.
- Set-up with a budget app like Mint or EveryDollar that can help keep track of all of your expenses, splurges, and savings habits
- Categorize fixed, recurring expenses like your mortgage or insurance
- Add variable expenses like a trip with friends or occasional splurges or
- Include categories for needs vs. wants, including a gently used car to replace your aging one, as well as a vacation or electronics splurge
- Add an emergency fund category to save up three to six month’s worth of living expenses that can cover unexpected income loss from a job loss to medical bills
- Avoid surprises with a category for periodic expenses, like car repairs or a co-pay
- Frequently revisit previous months to see how your spending habits have taken shape and how you can improve upon your financial goals
A budget can feel tedious at first but is crucial to financial literacy and comfort. Keep track of every dollar spent and watch your budget take shape. You may be surprised you’re not spending much in some areas, like clothing, but are overspending on coffees or drinks with friends. The more you can see where every dollar of your budget is going, the more you can make wise choices about how to save and spend.
Start with a budget and slowly add in these financial strategies to lay a foundation for success. Want to learn about more spending and budgeting strategies? Email us today at: email@example.com