Many millennials, myself included, are constantly worrying about how we are going to get by either on a daily basis, in our future, or both. Living paycheck to paycheck is, unfortunately, very much a thing. Supporting this fact is a survey of millennials by HowMuch.net which found that “51.8% of those aged 18-34 have less than $1,000 held between bank accounts and cash savings”
HOW DID WE GET HERE?! As I’ve stated in previous posts:
Millennials have the lowest starting wages in history, as they earn about 20% less than baby boomers did at the same stage in life
We have the most college debt recorded in history, leaving us tens of thousands, if not hundreds of thousands in the negative before we even start our entry-level 40k base jobs. (Average salary is 40k)
On top of that:
The cost of living is higher than it has ever been. In fact, the prices for daily goods have increased considerably since 1994, above and beyond.
One reason why the cost of living is SO high is because of inflation, giving the dollar much less buying power than it had just 20 years ago. This isn’t even considering all the expenses of today that our parents didn’t have (i.e., internet, phone bills, unlimited data, apps, computers, Netflix, etc.)
Because of these different types of financial circumstances, we millennials are left wondering how we will actually be able to move out of our parents’ house AND be able to make enough to make ends meet.
SOME LONG-TERM SOLUTIONS:
STEP 1: Write down your long term financial goals and the type of life you want to live.
Be careful not to focus on where you are now, or even how you will get to that goal. Just focus on the end result and WHY you want to the goal. The ‘why’ piece is so important because we all know that money doesn’t buy you happiness, it just makes life easier and helps facilitate the life we want to live. So what does that life look like, and why do you want it to look that way? Make sure to get very detailed and not stress about how you will get there. When we stress about the HOW, we tend to start thinking that we can’t make it happen. But that’s simply not true. When there is a will, there is always a way. Your plan to achieve your goal can be fluid and evolving as you go, but the goal is the goal.
STEP 2: Start an IRA and/or 401k. They are two different ways that you can save up for retirement today, because we all know a pension and social security will no longer be around for us. Very simply put, you put that money away, tax-free, and then it basically sits there and grows because of compounding interest. Quite literally, you don’t have to do anything, except continually add to it. Thanks to the power of time and compounding interest, you’ll have far more money at the end than what you started with in the beginning! Click here to see what your savings WILL look like if you start saving ASAP.
STEP 3: Cut back on expenses. How can we cut other corners in order to put our money away into savings when we can barely get by as it is? … Start jotting down ideas on how you can personally be more mindful with your expenses. It’s so easy to get caught in the trap of using our debit/credit card for every purchase we ever make, and then basically forget how much we actually spent each month until your bill arrives. As I have said before, we are a cashless generation, but maybe it makes more sense for you to switch back to cash!
STEP 4: Read and learn. Whenever I don’t know an answer or want to learn about a specific topic, I turn to the experts. Some that I have found to be really useful have been:
- Tony Robbins’ “MONEY Master the Game: 7 Simple Steps to Financial Freedom”
- “Broke Millennial”, written by a millennial for millennials.
- “You are a Badass at Making Money” by Jen Sincero (for more of a mind-shift towards money).
IMMEDIATE, EVERYDAY SOLUTIONS:
Step 1: Use cash. Maybe try to find an ATM each Friday and take out how much money you are willing to spend for the following week, and then once that money is gone you’re “SOL”, because you’re NOT using your card.
Step 2: Create a budget. Write out your income per month and then your monthly expenses you can’t NOT pay (including your new 401k/IRA), and see how much you realistically have at the end of the month and just work off that.
STEP 3: Start shopping the deals! Do a little more research and take note when Amazon or your nearest grocery store are having deals. I shop at Trader Joe’s instead of a big supermarket because it’s way cheaper. Also, I have never purchased an article of clothing unless it was on sale!
STEP 4: Take a good look at your recurring expenses. Do you actually use your gym membership? Or is it a $25-100 monthly cost that you’re wasting away? Do you really need to have your own Netflix, HBO, Showtime, Stars, every ESPN channel in the world? Or can you have a couple, and share the rest with friends? What other apps or monthly memberships do you have or pay for that you never actually use? GET RID OF THEM. You’ll be amazed with how much you save.
STEP 5: Start cooking more. My mom is an amazing cook. Growing up, she always cooked us breakfast, lunch and dinner, and never took us out to eat. When I got older I asked her why she did that, and she simply said that we were all big eaters and it was too expensive to go out… Think about it: you go to Dunkin or Starbucks and get a breakfast and coffee – about $5-10; then you go get a sandwich or salad with a drink at lunch – another $10-15; you order in dinner or go out to eat – easily another $25+… On the low end that’s a total of $42 dollars a day = $300 a week, for 1 person…I personally got that amount down to an average of $180/week for my fiancé and I to eat = about $90 per person. That’s a $210 savings. Hopefully this resonates, and will make that $5 latte from Starbucks a little less appetizing!
Now I get that this sounds like a lot, both from a timing and lifestyle perspective… But in reality, great things don’t just come to us. They take time, effort, and constant adjustments. They take discipline and consistency…
…So what it really comes down to is “HOW BADLY DO YOU WANT IT?”
You have complete control of what happens to you in the future, and that’s the beautiful and empowering part about it.
Now go get after it, and “SAVE DAT MONEY”!!