If you’re a millennial, you face financial challenges unique to your generation.

For example, a competitive job market and heavy student loan debt (among other things) can make it hard to be financially stable.

But there are plenty of reasons to be optimistic about your future, too. Good money management skills can help make it easier for you to reach your personal financial goals, and time is on your side. Learn a few financial basics below. Your future self will thank you for it.

Establish your financial goals.

Setting goals is important when it comes to finances. If you haven’t done that yet, you can get started with a few simple questions:

  • What do I want now – a new car? A vacation?
  • What comes next – a new home, maybe?
  • How about the long term – a child’s college education or my retirement, perhaps?
  • How important is each goal?
  • How much do I need to save for each goal?

Take stock of where you are now.

Once you get clear on your goals, you can create a budget to help you reach them. Start by calculating your current monthly income. Then, do the same with your expenses. Include entertainment, travel and hobbies (known as “discretionary spending”) as well as fixed expenses like housing, food, utilities, loan repayments and transportation. Now, compare the totals. Are you spending more than you earn, or is there money left over at the end of the month? Were you surprised by how much money you’re spending on going out to dinner, for example? Understanding your spending habits is the first step toward being able to change them.

Build a budget.

Now that you’ve written down where your money goes today, you can make a plan for how you want to spend it going forward. Did you find that you’re spending more than you make? Get back on track by cutting some discretionary spending. Do you have extra money in your budget? Pay yourself first by adding to your retirement account or emergency fund. The key is to plan ahead for how you’ll spend your money in the coming months. Be sure to include plans to set some money aside each month for your most important goals. You can make adjustments to your discretionary spending budget as needed to help free up the money for this. Having a specific plan in place can help ensure you achieve your long-term financial goals.

Establish an emergency fund.

Protect yourself from a personal financial crisis with an emergency fund. That way, you don’t use money earmarked for something else – like a down payment on a home – or go into debt when disaster strikes. How much you’ll need depends on your personal situation. Consider things like job security, health, income and debt when deciding the amount. You can build an emergency fund by putting a percentage of each paycheck aside to reach your goal. And when you get there, don’t stop. The more you can save, the better.

Be careful with credit cards.

Today, credit cards are almost a necessity, but they can lead to overspending. Before accepting a credit card offer, do your homework:

  • Read the terms and conditions closely
  • Know the interest rate and how it’s calculated
  • Understand hidden fees such as late-payment and over-the-limit charges
  • Look for rewards or incentive programs most beneficial to you
  • Call the credit card issuer with questions about the language used in an offer

Your credit card use affects your overall credit score. Set a balance you’re able to pay off fully each month to avoid overspending. You’ll build your credit while being financially responsible. Avoid missed payments, too. They can cause your credit score to suffer, making it more difficult and expensive to borrow money later.

Deal with existing debt.

At this stage in your life, you’re probably wondering how to manage debt such as student loans. You’re not alone: 86% of your peers have debt.1 Repayment plans make it easier to pay off student loans. See whether you qualify for income-sensitive repayment options or income-based repayment. Even if you don’t, you may be able to refinance or consolidate your loans to lessen the impact on your budget. Explore all your options to see what works best for you.

Beware of new borrowing.

You’re working to pay off your current debt so think carefully before you borrow more. Ask yourself the following questions first:

  • Is this purchase necessary?
  • Am I getting the best possible deal?
  • How much will this loan cost me over time?
  • Can I afford another monthly payment?
  • Can I wait to borrow more until I’ve paid off my current debt?

If you answered ‘no’ to any of these, you may want to pass on your purchase for now.

Take advantage of technology.

These days, there’s virtually an app or a program for everything and that includes financial basics. Many offer built-in calculators that simplify tasks like monthly budgeting or loan repayments. Experiment with what you find and you’ll most likely develop skills and insights you can use for future planning.

Millennials certainly face special challenges. If you’re in this generation, however, you also have the opportunity to get your “adult life” started off on the right financial foot. If you’re financially responsible now, you can help set yourself up for a more secure situation later.

 

Disclosure:
Part of this content has been contributed by Broadridge Investor Communication Solutions, Inc.
1 July 2015. The Complex Story of American Debt. Pew Charitable Trusts. Retrieved June 30, 2017, from http://www.pewtrusts.org/~/media/assets/2015/07/reach-of-debt-report_artfinal.pdf
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