Managing personal finance is one of the biggest challenges for generation Y today. Millennials don’t have a good idea of the concept of personal finance. If you want don’t want to face any money related problems in your future then you must have to stick to strict guidelines. It doesn’t matter how much you earn, but it matters how much you save after your expenses each month. So, millennials must prepare a monthly budget and try to follow it.
The following are the different methods which may help you to manage your personal finance
- Try to develop the habit of saving: Saving is the best method to manage personal finance. Always try to save an equal amount of money from your salary each month. It never matters how big or small your income is, you must develop the habit of saving. In the start of your carrier, you can save as much as 40% of your income. Later, you can save approx. 20% of your income because of your increased liabilities and other commitments. In this way, you can make your base strong for your retirement.
- Try to get a credit card- Most of the millennials don’t have a credit card. Several surveys have indicated that only 30-40% of millennials have a credit card. They don’t have an idea that a credit card plays a vital role in building a credit score. A credit score is the first thing which will be checked by your lender when you go for personal or home loan in your later life. So, every millennial must get a credit card as early as possible to make a good credit history.
Hence, if you are one of those millennials who doesn’t have a credit card, must apply for it now.
- Must have an emergency fund: Besides your monthly savings, millennial must prepare an emergency fund every month. That emergency fund will help you to come out from the financial crisis during the loss of a job, medical emergency etc. Not only this, but this fund will further help you in buying car, hosue, etc.
So, it’s very important to have an emergency fund besides your income and debts.
- Don’t neglect the importance of insurance: In today’s world where medical expenses are touching sky high, insurance gives much relief. Nowadays it’s very tough to pay thousands of dollars just for minor injuries. So, millennials must understand the importance of insurance and try to get insurance which will help you during emergencies.
All you need to do is to pay a small amount of premium from your salary on monthly basis and you are secure. There are various types of insurance which are required for different things like most important is life insurance, health insurance, vehicle insurance etc.
- Always try to invest smartly: The main purpose of investing is to grow your money. So, always try to invest in the right plans which can give you good returns in long term. A high paying job is not the main thing which helps you to grow your wealth (although it helps). But smart investment is the main thing which helps you to become financially strong.
There are various types of investment like securities, bonds, mutual funds etc which helps to grow money. All above are different methods which help millennial to manage their personal finance in a better way.