Expert Money Management Tips for the Working Millennial
Written by Anne Silva, Career Quaintrelle @ Phil.Exeq June 26, 2017
Liberal, trend-setting, tolerant, and fearless – these are the words that best describe the people who were born from the 1980’s to the late 90’s – the so-called millennials. Indeed, millennials truly reflect the You Only Live Once approach in life, but living in the moment is not an excuse to be financially unprepared.
Millennials have the most advantage in becoming financially literate than previous generations. With the advent of the internet and smartphones, access to information is much faster and convenient than ever before. A good amount of development in the financial and capital markets have also been made to make it easier especially for working millennials to invest and increase their financial state as they work and play.
Despite these advantages, most millennials still struggle to manage their financial health. Challenges such as the YOLO mentality and FOMO (Fear of Missing Out) are the immediate reasons why many millennials are still unable to save money—or worse, are burdened with debt.
When these things are kept in check, millennials would be able to achieve their financial goals while enjoying life. In this article, we will discuss some expert money management tips that will help you prepare for your future while enjoying the fruition of your efforts at work.
- Learn to Negotiate Your Salary
What most working millennials don’t know is that they can negotiate their salary. In fact, sixty percent of millennials don’t negotiate salary when receiving their first job offers.
While the impact of additional income might seem superficial during the first year of your employment, it has a long-term impact on your financial health since a lot of raises and bonuses are computed based on a percentage of salary.
Moreover, asking for more compensation also means that you will be able to back it up with skills and commitment to the company.
- Spend Less, Save More
For those who are new in budgeting, there is a simple rule that you can easily follow so you save faster and in a consistent manner: the 60-20-20 plan.
Basically, this rule implies that 60% of your income should go to your food, shelter, and other basic necessities, 20% goes to your personal savings account, and the last 20% on things that makes you feel good – from shoes, booze, to out-of-the-country adventures and quick weekend getaways.
Limit your expenses using this rule and you will surely be able to sustain your “YOLO” lifestyle.
- Have an Emergency Fund
In life, many things happen unexpectedly, be it about health, family, or employment issues. Therefore, a part of your savings should be allocated for such unforeseen situations. Many financial experts say that emergency fund should be equivalent to three and nine months of expenses saved.
If you think you can’t save that enough, you can build up by stashing away smaller amounts on a regular basis, like every week or every paycheck. For instance, you can set aside P500 a week for the emergency fund. At the end of two years, you could have P26,000 saved.
- Invest Early
If you want to retire early, then you need to invest early. There are banks that that allow you to open an account with as little as P100. There are also some investment or insurance firms that allow you to invest in mutual funds or in the stock market with as little as P5,000.
What makes investing and millennials a perfect match is because millennials possess the most important principle of investing: time. Educate yourself about the basics of capital market and take advantage of the power of compounding interest, then you can make your money work for you and grow it sufficiently enough to sustain your retirement life.
- Have a Good Credit Score
While there’s still no centralized credit reporting in the Philippines like there is in the US, it doesn’t mean that banks have no way of telling how good or bad you are as a borrower. Your credit scores are one of the most important grades you’ll get after you graduate since it reflects how long you’ve had credit, your payment history, and your credit-to-debit ratio.
Having a good credit score is vital if you’re aiming to secure a loan in the near future. To ensure a good credit history, avoid missing out on payments, keep your debts on the low side, and ask for your credit report at least once a year so you can evaluate all your past credit purchases all year round.
- Know Your Long-Term Goals
After you’ve successfully negotiated your salary and worked on your budget and investments, the next thing that you should do is to look at your wealth and savings goals.
You need to know where you are supposed to put all your hard-earned savings – will it be a house, a car, a startup business, migrate to your dream country, all these?
Develop a feasible timetable and be committed to it. With goals in mind, you’ll be able to make progress and it’ll keep you hooked during rough time.
- Track All Your Expenses
Whether it’s through a smartphone app or through the ever-reliable spreadsheet, keeping track of all the money that goes out of your wallet will help you evaluate your financial health.
By recording all your expenses, you will be able to know which areas of your life you are spending too much or too little money on, allowing yourself to identify potential financial problems and improve your savings as needed.
- Use Technology to Your Advantage
Learning about financial products and capital markets is much easier for millennials. Compared to Baby Boomers and Generation X, millennials have the luxury to access a plethora information at their fingertips, anytime and anywhere they want.
You can also interact with a lot of resource person and experts over the web and ask for advice and tips to further improve your spending habit.