5 Important Money Management Tips for Millennials
Whether you’re aware of it or not, you’re already in money management territory every day.
Every decision you make: to buy something now, leave it for next month or not make the purchase at all, to go out today or not, to set up Direct Debit for those bills or not; it all involves at least a little bit of money management.
The difference is simply that some people do it better than others.
But the good news is you don’t have to be a financial expert to be on top of your money.
You can find room for the things you love even in the tightest of budgets, but that calls for careful money management.
We’ve put together 5 tips to help you hone your money management skills.
The Top 5 Money Management Tips for Millennials:
Pay yourself first
Work out your weekly, fortnightly or monthly savings goal (in line with your pay cycle). Then take this amount ‘off the market’ as soon as you get paid.
Many people plan to save, but they usually do it with what’s left at the end (if anything). Don’t wait for the end of the month and save just what’s left as it’s too easy to have spent all your money and just say “oh well, next month I’ll do better”.
For our members, we ensure their savings account is with a different bank than their everyday spending which makes it harder to access that money, and puts a barrier up when they may be feeling a little impulsive.
Withdraw your weekly spending amount in cash
If you find the whole tap and go system makes it hard to keep track of how much you’ve spent each week, consider withdrawing your weekly spending in cash. Use this for your coffees, lunches, dinners, ice cream, that sort of thing.
It’s amazing how much you can overspend by just putting everything on the plastic. It also intrinsically hurts a little more having to handover cash, so you’re definitely more wary of what you spend.
Use technology to your benefit
Track your spending.
We see it time and time again, millennials spending their entire pay packet but they can’t tell you where goes. Apps such as Pocketbook can take the hard work out of budgeting for you by segmenting what you spend and assist with forward planning of expenses and bills. It’s a pretty interesting exercise to see the exact amounts you spend and where.
As they say, what is measured or tracked, improves.
Offset accounts are only offsets if there is money in them
Offset accounts are sold as a great way to save on interest if you have a mortgage.
In reality, offset accounts are great to house genuine savings but shouldn’t be used like a transactional account because it is far too easy to overspend. Put it out of your view so you don’t think you’re loaded each month. Think of your offset account as a place to keep your emergency buffer funds.
Insurance is a necessary cost, spend it wisely
There are many ways you can pay for insurance, which includes from your pocket and out of superannuation.
It’s important to be structured appropriately as each way has some pretty substantial consequences. Things like own occupation TPD and agreed value income protection need to be paid for personally but that’s not to say part can’t come from super with the right facilitating product. This is where an expert’s advice can add serious value in the event of an incident or claim.