Millennial Money 101: Develop a Budgeting Routine
The beginning of a new year is a great opportunity to self-reflect, set new goals, and create actionable steps to achieve a new desired way of life. Most of us can easily identify areas of our lives we wish to improve, yet struggle when we begin to lose that initial motivation from the start of a new year. Rather than focusing on changing our attitudes and behaviors, we find every excuse to fall back into old patterns during times of stress.
Many of us find ourselves in a state of financial strain, especially early on in our careers. This is often a result of a lack of routine surrounding our spending habits. Following a budget, like many other habits, can be difficult to stick with if you don’t create a plan that works for your lifestyle. If you’re a millennial struggling with money management and want to reach your financial goals this year, check out these steps!
Know Your “Why”
The first and most important step of making a lifestyle change is understanding the reason why you want to or need to change in the first place. Challenges and temptations are inevitable and in order to push past these tough moments during your journey to a better lifestyle, you need to have a strong why. Having a clear motivating factor, such as saving money to purchase a home, take a vacation, or pay off college debt, will provide you with motivation and reinforce good habits even when it feels difficult.
Determine Your Income And Expenses
After you have identified your reason for getting a handle on your finances, it’s time to work with your numbers. Make sure you know exactly how much money you are bringing in each month. From there, note your fixed expenses, or non-negotiable payments you must make each month for things like rent, utilities, gas, insurance, and so on. After that, consider common monthly or seasonal expenses. This will include things like shopping, eating out, socializing, attending workout classes, and other activities that you pay for throughout the week. This is important as you will likely want to continue budgeting for these things–or consider making some modifications.
Build Your Budgeting System
This is where things start to really matter. Once you have a clear understanding of your financial income and how much money you’re typically spending each month, you can get more specific. Some people prefer to implement a zero-based budgeting system where they assign a purpose for each and every dollar. This is a great way to ensure that you don’t just lose track of half of your spending money to random purchases you’ve forgotten about. It is also a great way to start building an emergency fund or pay off debt since you will be planning ahead and will need to allocate this money somewhere. Use the free Finance Tracker download to ensure you are on track with your budget.
Use Mobile Banking
There’s no denying that we spend most of our day using electronic devices such as laptops, cell phones, iPads, and watches. This technology has made our lives extremely convenient, especially when it comes to automating and tracking. An easy way to stick to your budget while maintaining a busy lifestyle is to download a personal online banking app, where you can manage your account right from your phone. According to a 2018 survey, 47% of millennials prefer to use mobile banking as it allows you access to send, receive, and track your money from anywhere. It can be extremely useful if you're traveling, running your own business, or have a schedule that’s always changing. Take advantage of opportunities that allow you to better manage and organize your life using technology you already have.
Reinforcement is a great way to build on new habits and behaviors that you’re trying to adopt. Regularly checking in on your finances and updating your budget as your income changes will help ensure you’re spending your money in the best way possible. Set aside time at the beginning of each month to set your budget based on your financial state and account for any changes your finances with changes to ensure they align with your goals. Practice building your best routine that excites and motivates you to be your best self. Consider writing weekly goals down in your planner so when you see them each day, you are inspired to accomplish your tasks, knowing they contribute to a larger goal. Continue to remind yourself of your reason why and take steps that bring you that much closer.
Meet with A Trusted Advisor
If you’re new to financial management, it's not a bad idea to sit down with a financial advisor who can review your overall portfolio and ensure you’re on the right track. Companies like The Financial Gym have made it easier than ever to meet one on one with an expert, and are a great investment in your journey towards financial freedom. They can provide important information you might have missed and fill in any gaps in your planning process. It never hurts to get a second option and have someone you trust hold you accountable.
Make it your goal this new year to come up with an actionable plan to set your finances straight and follow-through with no excuses. Utilize knowledgeable people and accessible resources that can help guide you toward a future of financial success!