Taking the Stress Out of Young Adults’ Finances
A recent article points out that millennial women are stressing out about their financial situation. Over 50% of participants who took part in a survey conducted by the Bustle website say they do not talk about their finances with other people. Twenty-eight percent of the participants acknowledge that they worry about money all the time. This fear is a sad state of affairs because a person’s financial status should empower her, not intimidate her.
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Managing money is not something most young women learn from their families or school. This gap in their knowledge base is keeping them up at night. BMO Wealth Management asked over 1,000 Millennials what their biggest stress factor was, and 65% said it is finances.
Create A Realistic Budget
The first step to overcoming this dilemma is creating a realistic budget. But, for some reason, this is the most difficult step for many young people. In spite of the procrastinating that occurs, young men and women have to face the truth. Without a road map, it is extremely challenging to find your way.
Create a Financial Plan:
You need a financial plan which includes short-term and long-term goals. Knowing what you are aiming for allows you to hit the bullseye. If there’s no target, there isn’t a possible way to hit the mark. Put saving for the future in the first place of your plan.
Learn and appropriate the 50-20-30 plan. Use 50% of your income to take care of the essentials, such as rent, utilities, car payments, and so forth. Twenty percent of your income should be placed in a savings account or plan, be used to pay off debts, and for a “rainy-day account. The last 30% of your income can go toward enhancing your life. This part includes travel expenditures, cable bills, gym memberships, and other such discretionary items.
If you have debts, and you probably do if you have graduated from college, paying them down is the #1 priority. Then the object becomes staying out of debt. An excellent way to achieve this goal is to find small ways to save money.
• Cook your meals.
• Stop buying compulsively.
• Use coupons, store savings cards, online price-cuts.
• Find a side gig.
If you establish these habits in the early part of your adult life, you will follow them for the rest of your life. This percentage-based idea will serve you well in your 265 square foot studio apartment as well as when you get your first six-figure salary,
Remember that this idea is not a punishment. In fact, there will be times when you have to “rob Peter to pay Paul.” There will also come a time when you will need to revisit this plan and rearrange it to match your budget that is, hopefully, helping you make the most of your money.