Welcome to the adult world. As you enter this new chapter, you have long‑term goals to figure out: personal goals, career goals, and even financial goals, and we cannot stress enough how important it is to start planning for your financial goals most especially. After all, nobody really gets very far in life if one’s finances are not properly managed.
We’ve listed the common mistakes of millennials in managing their finances and we hope that you won’t ever find yourself saying:
Most millennials think that budgeting your money is only a strong suggestion. Wrong! Budgeting is a must if you want to manage your finances properly. And we’re not just talking about saving enough money for the next travel or weekend sale. We’re talking about thinking way beyond your next paycheck.
Budget your money and allot certain amounts or percentages that you are willing to spend for each need and want. By assigning these caps or limitations, you’ll be able to say which expenses really are your non‑negotiables and which aren’t. But more importantly, make sure you stick to your budget!
Credit cards are your best friend and worst enemy. Never put yourself in a situation that you’ll get wild swiping that plastic left and right. With the emergence of tons of online stores that pop on your screen every few minutes, self‑mastery and self‑control will definitely be a challenge, but one that can be done with the correct mindset. Remember, the key here is moderation. It’s okay to use your credit card once in a while, but just make sure you don’t overdo it or else you’ll be feeling much regret once that bill arrives.
Most of us prefer to not think about these things or at least postpone thinking about them for a few years. While medical and life insurance may not always be a priority, it’s wiser if you start them early. After all, nobody really gets faulted for being prepared way too early, right? Check out our previous column on life insurance here.
Sure, you won’t be retiring in the next five to 10 years, but it’s never really too soon to prepare for it, isn’t it? Imagine, if you live until 80 and will be retiring by age 60, that’s 20 years of your life without a job! And 20 years—that’s roughly your age now. Most young adults postpone planning for their retirement plan because they think that it’s decades away anyway, but what they’re not taking into consideration is the power of compounding interest. Compounding interest could be your ally especially if you’re about to start planning for your retirement. The earlier you think about your retirement, the better.
These are just the common traps that we hope you never find yourself saying. After all, if you really want to do a good job at this #adulting thing, you really have to start acting like a responsible one.