Being a millennial (aka me or anyone born between 1981 and 1996) has its virtues and shortcomings, but more often than not, millennials are considered to be financially undisciplined – often depicted to be spending all their money on avocado toasts and boujee coffees.
Millennials confront greater difficulties— including economic uncertainty, student debt—than those who came before them. We are faced with lower earnings, higher house prices and rise in the cost of renting. All of which are leaving millennials financially behind. Many of us have begun to compensate for this by building additional income sources. All that coupled with the fact that there is no doubt so many of us are not hitting the “restart” button in the aftermath of the pandemic. We are all facing new challenges which will determine our next step in our career and financial goals. As a generation carrying new personal financial responsibility, it is critically important for Millennials to be on a path leading toward financial security.
So what is financial literacy?
It is the ability to understand and effectively apply financial skills such as money management, budgeting and investing in ever day life.
How do I get there?
Understand your money
- Do you have online banking? You don’t – well you need to get yourself on that so you can monitor your day to day expenses more closely.
- Begin by looking at your bank/credit card statements form the last two months. I mean really look, like I am talking print them out, pull out your highlighters and coloured pens and get reviewing!
- After reviewing, take a step back and consider why you may be overspending – is it because you feel like new clothes, beauty products, and the latest tech will make you happier? Does it actually work or are you being guilted into it?
- Speaking of guilt it’s time to
- Track your expenses manually for a month…Like actually, WRITE IT DOWN! Use a page in your planer and every time you spend, write that shit down. For most people this is much more tolerable than opening up a spreadsheet each month. Understanding your financial leaks is key to being able to being in a position to better manage your money.
- Do you have debt? Organise it using a spreadsheet, or a pen and paper – write down all your balances – so credit cards; student loans; car loans; mortgage repayments etc. When you make your monthly payments deduct the amount from the overall balance – being cautious to be aware of interest rates.
Manage your Debt
- From your debt tracker, pick a small balance to focus on clearing at a time and put extra monies towards this debt and get rid of it!!
- Pick another source of debt, this time the on with the highest interest rate – maybe a credit card? Knock that one down too!
Pay yourself first
- There’s no point in focusing all your efforts on paying off your debts, if, when you clear everything, you have no savings to sustain yourself – particularly in an emergency. If you focus all of your energies in paying off your debt but not setting some money aside, if an emergency arises you are automatically drawn back to being in debt! It’s a vicious cycle…
- While paying on your debt you should focus on paying yourself first – aka saving money and setting some funds aside for the occasional treat. The best way to do this is to make a budget! You Really Need a Budget….and not just any budget but a budget style you love!!
- It is so easy for millennials to disregard having any kind of budget. We go weeks without checking our bank account statements in fear of seeing how little money we actually have. You might not have a budget because you are under-employed or even unemployed, or you just assume everything you’re making will go towards your never ending student loan debt. Now is the time to change that. You want to start off by making a budget that is right for you. There are so many easy technological budgeting tools that are perfect for digital natives like us.
- There is an abundance of material that can be accessed at the click of a button. BUT, not all material is good material. It is always good practice to dedicate a minimum of 1-2 hours each week to reading books about money management, investing, finances, etc. Some of my favourites are:
- Mindful Money by Kel Galavan
My go to online sources are:
- Financial Times
- Revenue is a great resource for understanding the in’s and out’s of tax/tax incentives you might be able to avail of. For all my Irish readers be sure you have set up a Revenue MyAccount. This will allow you to easily view and manage your tax affairs online.
- Personal Finance section in the Irish Times
- Listen to Financial Podcasts – be sure to check out the adulting series on Legal Diaries Podcast!
- Take an online class – my go-to is often skill share and bonus tip is that they currently have 2 months premium access free first-time users.
Based on all you have learnt – its time to Sketch Out a 5-year Plan. Sounds terrifying I know but this is where you need to have some real talk with yourself and ask:-
- Do I want to be renting in 5 years-time? How much money do I need to build up if I want to own a property.
- What are your long-term financial goals? E.g. pension plan
- Are you now comfortable with stocks? Should you consider investing some of your money?
The Benefits of Financial Literacy
Honestly, the benefits are endless but my favourite is that instead of letting money control you, now you hold the reins to your personal finances. This empowers you and makes you feel more confident and decisive with your money.