One major dilemma that a lot of millennials are currently facing has something to do with what’s inside their wallets.
In this Wall Street Journal podcast, Shannon Schuyler from PwC discusses the financial challenges of millennials. “College-educated millennials are really graduating with a very limited sense of what to do with their money,” she says. While it’s true that millennials build more than half of the world’s workforce, the eagerness and excitement they get from hustling often lead to vigorous spending habits.
Spending habits. These are the magic words that will soon become one of the younger generation’s toughest problems. Of course, we can’t blame ourselves for blowing our paychecks in pursuit of a new pair of shoes, a new wardrobe, or a round trip ticket to anywhere in the world to play Eat, Pray, Love. We millennials have unconsciously adapted the YOLO (You Only Live Once) mindset and it’s slowly killing us.
While rewarding yourself after a month’s worth of hard work is good, most of us forget to see the bigger picture: Saving is crucial. If you feel like you’re always crawling a week before payday to make ends meet, chances are your spending habits are to blame.
“Financial capability is the opportunity to put knowledge into practice,” says Dr. Terri Friedline, assistant professor at the University of Kansas School of Social Welfare. Truth be told, most millennials are fortunate to get a college degree, so we ought to be smarter with our choices—finances included. And it’s not difficult to save money, either. If our parents did it, why can’t we?
Educate yourself
The first step always comes from learning. There are tons of insightful articles online that can help you improve your financial literacy. A survey conducted by Standard & Poor’s Ratings Services shows that only 25% of Filipino adults are financially literate. It’s won’t hurt to bump those numbers a little higher on the scale by learning about budgeting, investments, and insurance.
Set financial goals
This can be separated into three categories: short-term, mid-term, and long-term. Examples of these personal financial goals are saving up for a new home, tuition for post-graduate studies, or a dream vacation, among many others. Prioritize each of these goals in order of importance, then estimate how long you need to save for each goal. Don’t be discouraged if it gets overwhelming. What’s important is that you have a set of tangible financial goals to look forward to and make sure to review your progress.
Never spend more than what you earn
I think you can sacrifice a few cocktails to save more for your future. You can do this by budgeting your monthly expenses. There’s the 50-30-20 rule, where you spend 50% of your earnings on needs (food, rent, utilities), 30% on your wants, and 20% on your personal savings. Thanks to technology, budgeting is made easy through user-friendly apps that you can download straight to your phone.
Starting is almost always the hardest part. But as long as you follow and live by these rules, your financial woes will be gone for good.
