Countless “motivational” posts encourage me to travel now, invest later – while I’m still young and free – can only do so much. There’s also the contradictory advice that reminds me that I’m better off investing first: “build and invest in your 20s, relax and travel by your 30s and 40s,” they say.
But I have bills to pay, tuition, and a few indulgent shopping trips to conquer. How do I decide? What’s a millennial to do?
Being financially dependent isn’t so exciting when you’re in your late 20’s and in debt. Budgeting is more than just paying bills and maintaining a bank account. Deciding how much one should be spending isn’t so simple after all.
We all have different priorities. For those living and working alone, utility bills may come first. But when you’re a working student, tuition comes into the picture. Those with partners, or even families, allot greater portions to the family’s needs. Cable or Netflix, internet and cell phone plans are typically just icing on the cake.
2. Start small.
Gradually ease into paying your own bills. Start with the minor payments, like your cell phone plan and a portion of your tuition (thank you, supportive parents) on your first few months of financial independence. Then slowly move on to contributing to the electricity/utility bills, and later on, your rent.
Avoid having more than one credit/debit card. Make sure you pay them in time so they don’t accumulate or charge for extra fees. Be aware of interest rates.
3. Know your wants vs. needs.
Invest in things that will last, rather than spontaneous purchases. Trends come and go – sometimes they even vanish too quickly. Don’t let the same happen to your bank account.
Only bring the cash you need to avoid overspending. As convenient as it may be, being credit card reliant increases your inclination to spend.
4. Accept support.
Being a stay-at-home daughter/son isn’t such a bad idea after college. Not only will you save on rent, you’ll also get to enjoy your parents’ home cooked meals without a cost.
This is also the opportunity to talk to your parents about something you never paid attention to (or were never taught) in school: taxes. Take advantage of their clinginess before they officially send you off into the adult world.
5. Be a picky payer.
Be choosy. Window shop and keep an eye out for the items you really want. If you still long for it a week later, buy it. Chances are, if it’s not a priority, you’ll forget about it halfway through the week. Also keep an eye out for sales, deals and clearances. You don’t always need to buy items at full price.
Quick tip: if you can’t instantly respond to the rhetorical “Why did I buy it?” question, you probably shouldn’t have made the purchase.
One way you can save AND leave some room for occasional splurges is to follow the 50/20/30 rule of budgeting.
Allocate 50% of your income to your basic needs. Use 20% for things you can slightly live without, but are better off giving importance to, like your savings account, insurance and an emergency fund. 30% of your income should go to your voluntary expenditures and personal luxuries.
7. Use apps.
There’s an app for almost anything these days.
Off budget and having trouble managing your finances? There’s an app for that. Monefy: Money Manager and Mint:Personal Finance and Money are just a few of the widely utilized applications in the market.
These apps contain alarms and reminders that remind you when you’ve gone over your spending limits and allocated budget for a given time period.
No time to go to the bank? A majority of them also have online websites and apps to help make transactions easier.
How liberating would it be to go shopping without glancing at the price tag? This will only be possible if you’re tremendously monetarily stable. In order for this to even be a possibility, you have to learn how to track your spending and closely monitor your cash flow.
It’s quite hard to accept the fact that not being financially responsible for (almost) anything during the first two decades of our lives was a huge privilege and perk we no longer have.
The best thing about being a twenty-something, though? We get to decide what we want to do and pursue with what we make. Financial stability will help us create the most out of money and our memories.