When you become financially independent, you’re left with a rude awakening.
Mom and dad aren’t paying for all of your stuff. You have to pay rent, groceries, and all of your bills. And the pressure can leave many young people in shambles.
It’s easy for millennials to take out a personal loan when they can’t cover all of their expenses.
Minimum wage is low, competition is tough, and good paying jobs are few and far between. But even when you take out a personal loan, millennials should get into good financial habits.
Here are 10 financial tips all millennials will find useful and when you’ll need a personal loan.
1. Take Online Financial Courses
There is a myriad of online colleges and courses that can improve your knowledge of accounting and economics.
Even if these courses cost a little money, they will broaden your knowledge of finance. These courses are easy and you can access them from the convenience of your home and computer.
There are also plenty of free courses you can take. These courses help with personal financial planning, preparing for a family, and taking out loans.
Depending on the course you take, some are even a lot of fun. These courses get you excited to learn about finance and help prepare you for the added financial responsibilities you’ll have.
2. List Your Expenses First
Millennials are smarter than what lots of previous generations give them.
Millennials are raised with awareness. The internet age leaves them surrounded by knowledge and thirsty for more.
Unlike previous generations, millennials also know the importance of getting a college degree and starting a career at a young age.
But unlike other generations, millennials are bad about splurging–even if it’s on minor expenses such as lattes and avocado toast.
Before buying that cold brew or IPA, millennials need to list and plan their expenses before splurging. Make sure you have enough in your account to pay off your bills.
If you’re still struggling, a personal loan can help pay off any extra expenses.
3. Start Investing Early
Retirement is the dream, right?
But millennials aren’t taught how to invest and safe; no school offers courses on the importance of retirement planning and many parents still work paycheck-to-paycheck.
If you’re lucky to land a job that offers 401(k) benefits, it’s likely millennials won’t get these positions until later in their career.
You don’t need an employer 401(k) to start saving. There are plenty of retirement accounts, such as independent IRAs, that offer investment benefits.
With interest, stocks, and bonds, your savings can increase with every year.
Still stumped? Many national banks offer these types of retirement accounts. You can also hire a financial advisor who can guide you to the best retirement savings plans.
4. Your Credit Score Matters
Your credit score matters more than you like. But millennials are the generation who aren’t on the right path. Hefty student loans can put a damper on their credit score, putting you on the path to a poor credit score.
What happens if your credit score is low? This can affect everything from buying a car to buying a house or even signing up with a better credit card.
Millennials should try and check their credit score as frequently as possible.
Some banks even offer a monthly credit score service, where their credit score is sent directly to them every month. These soft credit checks won’t affect your credit score and will give you insight about improving your credit score.
What if you need a loan with a bad credit score? Don’t worry, you still have plenty of options.
5. Find a Mentor
There’s plenty of self-help options online and in books, but there’s nothing like having a mentor.
Find a financial expert or rely on words of wisdom from someone who’s financially healthy. This person can be a friend, a family member, or a colleague who works in finance.
There are reasons why finding a mentor is beneficial. These people know you personally and can give you specific advice. You’re also comfortable around them and trust their wisdom.
Find someone you trust with financial knowledge. Ask if they can be your mentor.
Ask them any questions and update your financial health progress.
6. Track All of Your Spending
Have you ever looked at your credit card bill and wonder where all of your money goes? This is the first sign of improper financial planning. Your best bet is monitoring every single expense you have–even the unplanned ones.
This seems difficult, right? Not if you break it up into categories. Here’s how it’s done in the business world:
While you don’t have to worry about liabilities the way a business does, you can use this model and apply it to personal funds.
Your model can look something like:
- Income (your weekly, monthly or yearly salary)
- Liabilities (this can be your bills and any debt you have to pay off)
- Expenses (everyday expenses, such as food)
- Assets (any excess income you can spend on entertainment)
This way, you’ll never fall short. And if you do, you can easily take out a personal loan.
7. Start Saving
Start saving early. And this is beyond saving for retirement.
There will be a time when you need a rainy day fund or maybe there’s a product you want or a travel trip you want to take.
The best course of action is to save a little at a time. Say you start applying the model from the previous point. Rather than set aside money for entertainment, use that toward your savings.
Even using half of your entertainment fund can put you in the right direction.
What if saving is out of the question? A loan can cover rainy day costs.
8. Download Financial Apps
There’s another main reason why millennials are a step ahead of previous generations in the financial game. Millennials have financial help right at their fingertips.
Mobile banking and a myriad of financial help apps are putting millennials in the right direction.
Referring to the previous point about mentors, these apps can act as a mentor if you don’t have one. These apps track your spending and savings habits and offer you (free) advice on improving your financial situation.
Plenty of banks also offer these services. Ask your bank if they offer free financial consultations or have the option available on their website or app.
9. Your Spending Habits Will Change
People will always give millennials lots of slack. But then millennials will give the next generation issues when they get older.
Why is that? It’s just the way of life–and spending habits.
Millennials are the ones who attend happy hour. They buy the newest iPhones, the best beauty products, and the hottest fashion from the latest designers.
You’ll never see the previous generation spending money on these products.
But the older generations also do spend this kind of money.
They have kids, a spouse, and a home. They’re buying all the necessities for their children, buying products for the home, and may even spend more on necessary industries such as healthcare.
The amount you spend will likely never change, but what you spend on will.
Identify these changes and reflect on how they change you as a person and how you view finances. And if you can’t cover all of these expenses, you can take out a loan.
10. Listen to Your Parents
Maybe you get annoyed when your mom calls and asks if you’ve been drinking too much. Or maybe your dad is encouraging you to buy a house because you’ll be spending the same you’re currently spending on your fancy studio apartment.
But there’s a reason they’re lecturing you. They have more financial knowledge than you do. They want to make sure you do well financially and are trying to put you on the path in the right direction.
Your parents may not be perfect, especially if they have no savings and are living paycheck-to-paycheck. They’re looking at their mistakes in life and making sure that you don’t make the same ones.
When Do You Need a Loan?
All of this advice may sound easy, but life happens. Whether you’re in a car accident or your house is damaged, there’s a time when these financial tips just aren’t cutting it.
Fortunately, you can take a loan and cover necessary expenses until you’re in a better financial state.
Personal loans work best when you have an essential or emergency purchase, and you can’t cover that purchase with the money you have.
There are also a variety of personal loans available with low-interest rates, loans for bad credit, and smaller loans that can be paid off easily.
Use These Financial Tips to Help You in the Future
Millennials often get a bad reputation when it comes to money management. But millennials are living in the best time when it comes to finances.
Financial help and advice are at your fingertips. But it’s still essential to plan for your future and better manage your finances.
Use these financial tips to guide you to a money-healthy future. And remember, you can always take out a personal loan.
Are you a millennial who needs a personal loan? Take a look at our options.