No more is it a hushed talk… Our education system is broken. The curricula are still far from teaching students about personal finance. So, those who graduate, not only do they just lag in the fundamentals of finance, most of them even fall flat when it comes to using money effectively for a sustained future.
Personal finance in itself is a rigorous concept that can’t be summed in a few tips and suggestions. There are so many different denominators to it that one must consider when planning own personal finance. After all, for some, investing in real estate might be a good idea; for others, saving for healthcare could be more imperative.
But that said, there are a few vital points to it that one must adhere to. Here are 7 personal finance tips that every millennial need in 2020:
1. Get a better paying job
This is the cornerstone to have better financial standing. Your primary source of income must pay you enough to afford your spending, savings and investments. Now, of course, not everyone can bag a high-paying job – not at least at the early stages of their career. But whenever and wherever possible, look for a better paying job. Financially, optimize your day-job; make sure you’re making the most in returns.
2. Create definite monthly budgets
This is one of the most important parts of the process and yet so many people undermine it. To save yourself from impulsive purchases and unnecessary costs, you must outline an amount that you can afford to spend this month. So, calculate your expenses, incorporate the surprise expenditures you may have to make, and then create a definite budget every month.
3. Set aside an emergency fund
You can’t anticipate when you or anyone in your family might fall sick. You don’t know when you might need a large sum for any emergency purpose. In personal finance, being realistic is the key. So, to meet such unexpected needs for money, you must set aside an emergency fund. Now, how big should be your emergency fund? The answer varies, depending on the kind of lifestyle you live, the cost of healthcare in your city and more. But to give you a basic idea, you should have at least six months of your salary saved.
4. Invest your money in high-return assets
Once you have set aside an emergency fund, saving your money in the bank account is a bad idea. Instead, you should invest that sum in high-return assets. Stock market investment is likely the best option here. So, invest in stocks. If you know nothing about it, go through stock market training first. Learn the basics; know more about technical analysis like triple Bollinger bands strategy. Once you’re prepared and have a good idea about the stock market, take a step to invest in stocks.
5. Say ‘no’ to unnecessary spending
This goes without saying… unless you’re really wealthy, you want to avoid unnecessary expenses. So, limit the number of outings with your friends. Go to affordable outlets to eat. Don’t purchase expensive clothes and accessories. Save (and invest) that sum wherever possible; even a small amount would end up to matter a lot.
6. Be thoughtful in paying back your debts
There are some people who want to repay their debts as quickly as possible. And then there are those who don’t much care about paying the money back to the lender. Both are wrong approaches. Instead, when it comes to paying back your debts, you want to be more strategic and thoughtful. Depending on your income, expenses, savings, and investment, you want to spare a thoughtful sum to repay the debt every month.
7. Increase the number of income sources
This is as basic as it goes. Today, just having one source of income, no matter how big that is, is a bad strategy. You want to have as many streams of income as possible, most of them passive, which enables you with a sustainable income in the long-term. The stock market is one of the top options here. You can also invest in real estate and startups. Do your research and diversify your portfolio.
These are personal finance tips that millennial needs in 2020. Again, as mentioned, personal finance in itself is a rigorous concept that can’t be summed in a few tips and suggestions. So, the above tips will only navigate you initially. It is you who has to make the executions and find your way ahead to a high-worth portfolio. In short, be vigilant and smart about your finance and ensure a fulfilling life.