Millennials are reshaping the economy. Their unique experiences, the rapid developments that they were born into, and their personal circumstances and expectations have been changing the way companies do business. Offering financial planning tips for young professionals has become the norm as they are presented with more options, alternatives, and opportunities.
A Gallup report found that millennials are spending more this year than they did last year. It is not fair though to dismiss young people as reckless spenders, because while they are spending more, they are spending more on what they need rather on what they want. Groceries, utilities, and healthcare are among their priorities. This doesn’t mean though that budgeting tips for young adults no longer apply. Young professionals are just entering their prime spending years and don’t really have much. Most are trapped in the paycheck-to-paycheck financial hole.
How do you not “just get by”? Financial managers have said it time and again that a change in the way we live is a good start. Here are easy, realistic tips on saving money for young professionals that you can start today.
Make your own coffee
The one item millennials outspend other generations is coffee. A report from TD Bank showed that young professionals spend about $80, or Php4,000, a month for coffee, well above the $67 or Php3,350 average, and nearly twice as high as older professionals. This is mainly attributed to the on-the-go culture. People these days drink their coffee during their commute or on their way to work.
Think about it this way: if you are spending over Php3,000 a month for your daily caffeine fix, think about what that money is actually worth. It could be your share in the rent, your electricity bill, your phone bill or your emergency fund.
If you can’t cut your consumption of coffee, invest on a French press and brew your own coffee. It’s worth more or less $30 or Php1,500, but it is something you can use for a long time. Go over to the Internet and learn how to make your coffee taste like Starbucks. Pack your lunches too while you’re at it. You will be so proud of yourself.
Back to the envelope
When was the last time you used an envelope for anything? It’s time to put them back in business. The envelope has been around for decades, and it makes the concept of budgeting more efficient. The key here is to strictly implement it.
If you have set aside $50 (around Php2,500) for a week’s worth of groceries, put the money in an envelope and label it as such. When you go to the supermarket, make sure you have it with you. If not, turn the car around to go back and get it. An effective personal financial tip in using this system is to make sure you only spend what’s in the envelope. If you billed $60 (around Php3,000), take out other items from your cart instead of adjusting your budget. The envelope system is especially recommended for items or activities that do not have a fixed amount such as groceries, dining or entertainment.
There’s an app for that
If you do not like the idea of envelopes, go mobile and download budgeting apps. Level Money is among the simplest apps as it lets you know how much available cash you have for the day, for the week or for the entire month. To receive alerts on your bills, there’s Mint. To help you optimize your investments, there’s Personal Capital. LearnVest is like your personal secretary that links to accounts and files purchases in specific folders.
Learn from the Japanese
The Japanese people are obsessed with minimalism. And young professionals ought to learn a thing or two from this condo design concept. You shouldn’t buy more than what you need. A condo space is not much, and you should take it upon yourself to maximize every square footage. Be smart with your choices of furniture, explore thrift shops, de-clutter, and live simply.
Try your best not to buy things on impulse and without evaluating your needs (and your space). Condo living means living smart by achieving the perfect balance of functionality and style.
Of memorable staycations
It is okay to stay at home on weekends. It is not a matter of being cool, but a matter of responsibility. A study by JPMorgan found that millennials are spending a lot more on “experiences” such as travel, entertainment, and dining.
But don’t limit your understanding of “experiences” to hitting the beach or trying out different brands of wine in fine dining. You can create memorable experiences by exploring your neighborhood or community. Among the benefits of condo living are the common amenities that you can enjoy. You can host pool parties, movie nights in the roof deck, mini-Olympics in the recreational areas, and so on. By exploring these amenities and being creative, you actually cut your condo electric bill because you don’t stay inside your condo.
Teach yourself to say “no”
“Let’s grab coffee in Starbucks.” NO. “Let’s have lunch at the mall.” NO. “Let’s check out the latest mall sale.” NO.
A steady support system is important in budgeting. Let friends, family, or co-workers know that it is your goal to be more financially responsible, and that you may have to pass on some Friday night parties. You have to slowly teach yourself to say “no” in order to have more control of your finances.
Embrace the idea of sharing
If you are determined to work around condo living on a budget and you have extra rooms or enough space, try to offer your unit for sharing with a friend or co-worker and have someone to split dues and bills with. Instead of booking rides every day, try carpooling instead. Try potlucks for lunch or snacks. Not only do you split expenses, you also gain friends.