7 Budgeting Tips for Millennial

Millennial are the Gen-Z people who are growing towards a developed economy and taking advantage of advanced technologies across the globe. However, with increasing age, they experience the joy of enjoying their life and living life to the fullest. With each passing day, millennial are coming towards bigger responsibilities and planning a secure future for themselves and their family.

This brings in a big topic to discuss, i.e., correct budgeting that can help millennial to manage their expenses and make wise use to secure their future. Nowadays, millennial are one such generation that has experienced global pandemics in a short lifespan, giving a great lesson for the rest of their life.

Fortunately, Gen-Z has long enough time to overcome the adverse outcomes of COVID and use their income smartly. Unfortunately, not all millennial are savvy enough about their money, and hence they end up with zero credit in their account. Some have student debt, while some have unnecessary expenses in their wants. This brings them into a dilemma of better managing the money and creating a smart budget for a safe and secure future.

FACT: Nearly 64% of millennial feel comfortable creating their own budgets

However, a fact also states that out of these 64% millennial, only 11% manage to stick to their plan while others get diverted towards unplanned expenses in needs and wants. So, what is a brilliant yet effective way to budget your income? Don’t Worry! Here are seven budgeting tips that every millennial must follow.

Tip 1: Track Your Spending

Whatever you spend is never acknowledged as it is a part of your enjoyment. Interestingly, no one wants to track it! However, until you don’t track every single expense you make, it’s tough to analyze your expenses and categorize them accordingly.

Your monthly budget may include numerous activities (for expenses), but this doesn’t remain the same for next month. Another month you may have paychecks to submit and clear your dues. This brings unbalanced spending that isn’t tracked, and you end up with zero savings.

Some millennial even make a budget but go off-track a few months later. The major reason behind budgeting is FOMO (Fear of Missing Out) which is absolutely irrelevant to your future plannings and savings.

Specific expenses like house rent, grocery, internet bills, etc., remain constant every month. You can’t compromise on them. All these expenses come under the ‘NEEDS’ category that you can live without and are necessary for your survival. However, another category involves miscellaneous expenses like clothes entertainment under the ‘WANTS’ category.

So, you should start noting every single expense made in the entire month. Check the recurring expenses (like home rent) and filter them with miscellaneous expenses (like recent outings). Now start adjusting these expenses to know which of them can be compromised for the future.

FACT: Nearly 40% of millennial use Excel to make their budget.

Tip 2: Use Your Budget to Boost Savings

After the global pandemic, the common man’s perspective has completely changed. People are now more focused on building emergency funds, planning their future, and safeguarding their families from upcoming and unpredictable pandemics.

Millennial are among the people who suffered from the global outbreak, and many of them lost their only source of income. This brings in the second tip, i.e., use your budget and increase your savings.

Now you have started tracking your expenses; it’s time to alter your monthly expenses and make a sensible budget for the coming months. Budgeting will include how much money you are earning and how much you are spending.

Most millennial consider budgeting in their early 30s as they consider their young age to enjoy life. However, experts always recommend that you start saving early to get an unbelievable sum soon and retire early.

Include the essentials in your budget and check how much you are left with. Even in your regular and necessary expenses, you must make a list to lower your routine expenses. With each cut you take from your budget, you move a step forward to increased saving, which is your ultimate goal.

Tip 3: Fix Your Budget (Regardless of Your Income)

Millennial are in their early stage of professional life, which is the primary reason they are least affected by pandemic-related issues. However, some still struggle with the consequences of global outbreaks and have limited income.

This brings in tip three, i.e., fix your budget regardless of your income. Whether working for a fixed monthly income or a freelancer, it’s crucial to binding fixed expenses every month.

FACT: Nearly 50% of millennial earn extra income through freelancing or other means in addition to their permanent job.

This is an excellent initiative by Gen-Z people who don’t have responsibilities and have enough time to earn money and sharpen their skills. However, this situation isn’t the same for all millennial. Hence, it’s crucial to make your budget and keep it fixed for the essentials and routine expenses.

So, whether you have a fixed monthly income or a fluctuating income, it’s essential to keep your expenses fixed and ensure the flexible income can easily cover your fixed expenses. For better understanding, make a habit of noting your income through various sources along with your expenses to keep an eye on your necessary and unnecessary spending.

Tip 4:  Set Your Spending Limit

Now you have a strict budget; it’s time to move to the fourth tip, i.e., set your spending limits. Your entire income is primarily divided into three categories: Needs, Wants, and Savings. You can’t compromise with the Needs; hence it’s essential to allocate your income portion for them. Wants are those expenses that are not necessary at the current time, but you love to own them. E.g., buying groceries for your daily diet is your necessity, while buying an iPhone isn’t necessary.

Millennial must learn to differentiate between their Needs and Wants that will help them better manage their funds. Moreover, restricting their expenses is also crucial to increasing your savings. You can’t limit your Needs; hence you should set your spending limit on Wants and ensure it doesn’t move out of your chosen limit. With adequate savings, you can even make charitable donations and contributions to the needy. Apart from satisfaction from charity, you also get a tax rebate on your contributions, which is another excellent way to make a smart move and get dual benefits.

Tip 5: Have Budget Goals

Your budget must be planned, but this doesn’t mean you bound yourself within the prefixed expense plan. You should learn to make flexible budget goals to help you spend for your Wants in a planned manner.

FACT: 1 in 4 millennial makes a new budget every month.

Undoubtedly, budgeting takes time and requires willpower to follow it rigorously. However, a fixed budget won’t crave you to follow it for long. Hence, you must add a cue to the budget and ensure your Needs and Wants are fulfilled without compromising your living standard. The best way to make a flexible budget goal is to add small yet achievable goals to your budget. E.g., saving for your iPhone is a goal that requires handsome money. However, it’s worthless to buy it on EMI until you don’t need it. Instead, you should start saving money for your budget goals and achieve it after enough saving is made.

Moreover, you must not divide your income into Savings, Needs, and Wants. There are numerous unexpected situations when you need money urgently. You must have enough cash in hand for such cases. Hence, planning for unforeseen problems is equally crucial alongside budgeting for your Needs and Savings.

Tip 6: Make Short Term & Long Term Goals

Millennial are still unfamiliar with different types of goals. Primarily goals are categorized as short term and long term. E.g., retirement is a long-term goal, whereas buying a phone or a car is a short-term goal.

Whenever you start following your budget and set your spending limit, you should also shortlist your short-term and long-term goals. Investment for long-term and short-term goals completely varies; hence, you should invest accordingly. The best way to strategize your savings for different goals is to consult with a financial advisor to help you select the right investment plan depending upon your goals.

Tip 7: Start Early

The last but most essential tip for millennial is to start early. Gen-Z has enough time to save and get early retirement. Today’s generation is more inclined towards financial freedom, and hence they always prefer saving big during that period.

The golden rule states that early you start saving for your future and get financial freedom without worrying for the rest of your life. Yes, millennial are nowadays educated towards financial freedom that lets them plan their retirement early and enjoy the rest of their life to the fullest.

If you are a millennial, you should read out these tips and follow them to proceed further with your income. These tips will help you manage your monthly funds smartly and effectively.

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