Over the years, millennials have garnered a notorious reputation. Most often, their lifestyle choices are scrutinized and criticized by older generations. Millennials are often seen to be distracted degree holders who cannot hold a job long enough and who cannot even afford a house of their own.
Regardless of how true or not these stereotypes are, the fact remains that the majority of millennials are in debt. Nearly 40 percent of millennials have student-loan debts apart from credit card debts.
Millennials came of age during turbulent times. They have witnessed the 9/11 terrorist attack and have experienced the Great Recession of 2008. The sudden shift in the economic landscape led millennials to face exuberant college tuition fees.
With the economic turmoil millennials experienced growing up, it is not surprising how unorthodox their spending habit might be for baby boomers and gen x-ers.
Hope is not lost for millennials though. By heeding these foolproof saving tips, millennials can eventually get out of their debt bondage:
1. Learn About Zero-Based Budgeting
Zero-based budgeting is a method of appropriating your expenses in order to gain total financial control. When creating a budget plan — whether it is a weekly, monthly, or annual plan — there should be a justifiable reason for every expense. In a nutshell, how much you spend should match the amount of money that is coming in.
Counted as expenses are not only mortgage loans, monthly groceries, utility bills, emergency funds, but also savings. List down all your recurring expenses and anticipated income, even to the minute detail. When going zero-based budgeting, you need to have a clear outline of your typical spending.
With a clear view of your expenditures, you can come up with a good budget plan and do away with unnecessary expenses you never thought you had. Through zero-budgeting, you are slowly gaining more control over your money.
2. Pay off Your Debts
Adulting means having to face your fears eventually. One of these fears you ought to face head-on is your debts.
Not just millennials, but a lot of people think that having debts is part of life. That should not be the case though.
Keep in mind that the longer you push those debts out of your mind, the longer you shall suffer. Carrying those debts longer means having to withhold some major life decisions like buying a house or getting married.
Lending institutions can be stringent when it comes to credit score requirements. Individuals who have several debts may find it hard to get approved on mortgages, car loans, or even landing a job.
3. Cook Your Own Meals
Millennials spend over $174 a month on eating out and food deliveries as compared to non-millennials who only splurge around $153 a month. In fact, a 2015 Food Network article noted that 87 percent of millennials are not hesitant to have a nice meal at a restaurant even when money is tight.
It is alarming that the spending habits of millennials on their meals eat up a sizable portion of their budget.
Between juggling work and other responsibilities, the most convenient option is to order take-out and dine-in. But for those millennials who seriously want to get out of debt, learning how to cook or giving time to prepare your own meal are good ideas to increase savings and eventually paying out those existing debts.
4. Set a Financial Goal
Having a financial goal helps you realign your spending habits, giving you a clearer view of your needs and wants.
You may start with short-term, achievable financial goals like paying off your credit card debt or paying your utilities and rent on time. Eventually, you will be ready to move on to major, long-term financial goals like saving up for a house or starting a business.
Financial experts suggest creating a visual of your financial goal by writing them down and placing them on a conspicuous area of your house. As you see these financial goals every day, you become more attuned and reminded to make financially matured decisions. Also, it boosts your confidence seeing that you have accomplished little by little those financial goals you have set up for yourself.
5. Make Lifestyle Changes
According to surveys, most millennials have zero if not less than $1,000 on their bank accounts. But they are poised as the country’s top-most spender as compared to other generations.
Although millennials do worry about meeting crucial financial goals such as retirement savings and student loan debts paid off, most millennials would rather spend on comfort and convenience. Shopping sprees, coffee shops, and ridiculously expensive avocado toasts are the things millennials rather focus on.
But for those who would want to get out of debt bondage, revisiting these unhealthy spending habits is important. Look back on the first suggestion and cut back on those unnecessary expenses.
Taking a hard look at your spending habits is never easy. But all the sacrifices will pay off in the end.