Apart from the unstable job market, one of the greatest plights that millennials are facing is the fact that they aren’t that well familiar with the delicate art of money-saving. Formal education fills one’s head with a myriad of useless information and trivia while completely skipping some aspects that are the most vital to one’s future and life in general. Your income is irrelevant if you can’t control your expenses, so, here are five saving tips that every millennial should know about.
The emergency fund
The first thing you need to keep in mind when it comes to saving money is the importance of an emergency fund. If you’re depending on a single stream of income or if you’re self-employed, this can be the safety net that protects you from the worst possible outcome. Moreover, you would be shocked at just how frequently certain unplanned emergencies take place, like when you have to embark on a costly home repair or when you’re in need of a medical procedure. Either way, keeping at least three months’ worth of your bills in this fund is more than recommended.
Modesty is advised
Another thing you need to keep in mind is the fact that the word austerity doesn’t have to have a negative ring to it if you’re careful enough. Spending lavishly will ensure that you don’t have any money to save regardless of your income, which could be a problem from a certain point of view. No matter how modest you think you are, there are some things that you simply can’t afford. If some of these luxuries are particularly important to you, what you might want to do is try to save towards them. In this way, you both avoid exposing yourself to unnecessary expenses and learn how to save at the same time.
Investment is sometimes the safest way
One of the most common misconceptions about saving money is the idea that keeping it in an account tends to be 100 percent safe and reliable. Keep in mind that the value of the currency fluctuates with the market and the most recent fluctuations of the USD and GBP are perhaps some of the best examples out there. This is why you need to diversify your portfolio and here, you have more than several options that are worth considering. We’re talking about stocks, cryptocurrencies, and precious metals. For most millennials, the latter is synonymous for gold or silver, while platinum is also a great investment.
Gamifying the saving experience
Earlier on we talked a bit about saving and how saving towards a goal can be helpful. This is because it provides you with an intrinsic motivation, therefore, giving you a strong reason to save money. Another thing that can be helpful is gamifying the process itself. For instance, you can determine one bill that you are always going to put aside, like a $2 bill, or even adopt a 52-weeks saving plan. In this way, the path to your goal becomes somewhat more bearable.
Blowing off some steam is important
At the end of the day, extreme austerity (like anything else extreme) is bound to backfire, which is why you need to blow off some steam from time to time. If you’re spending $10 on cocktails every week, cutting this expense completely can save you $520 every year. However, you could cut this expense in half and still save $260. The difference is that the latter technique tends to be more sustainable in the long run, seeing as how it requires less effort and less sacrifice on your part.
The most important thing that you have to realize is that saving money isn’t just a one-time thing. It’s not just something that you do until you pay off your loan or purchase a new car, but rather something you’re supposed to do every single day for the rest of your life. Once you realize that, you’ll start looking for long-term sustainable solutions and be one step closer to managing your finances in a much smarter manner.