Listen, there are a bunch of basic techniques that you’ve heard your entire life about saving and investing. There are the things that your parents have told you since you received that first paycheck: “I wish I would have done x at your age, I would have been so far ahead”. Whether this advice was “Pay yourself first” or “Make sure you diversify”, you know them by now and have either made them work for you or not. Here are 4 things that you need to understand about money – as a Millennial – in 2018.
- Other people have no problem spending your money – Summer is upon us, and everyone in your life is looking to celebrate their once-in-a-lifetime special day. Whether it’s their bachelor/bachelorette party, wedding, baby shower or 50th birthday, these special events are going to add up. It is hard to tell your best friend/cousin/old roommate that you appreciate the invitation, but you’re going to have to pass on their monumental event because you have 6 other monumental events in the next couple of months. Make sure to keep an eye on that money drain.
- Investing and Savings apps work, but don’t solely rely on them – There are a lot of apps out there that will automatically hook into your bank account and take out either a small amount each month and put it into a savings account, or round your purchases to the nearest dollar and invest that spare change for you. These are a great way to start investing, but spare change is not going to make as meaningful an impact unless you are going to be proactive about it.
- Small purchases add up – Yes, this one is DANGEROUSLY close to the parental type advice alluded to earlier, but not in the context of ‘that chocolate bar you bought today along with that coffee you went out for yesterday could eventually bankrupt you’ type thing. What adds up is the routine of doing it. Go for that chocolate bar, if you’re looking to treat yourself. Get a coffee with a co-worker as a little pick me up. That’s fine occasionally, but doing this every day will keep your bank account from growing.
- Saving is hugely important, but negotiating is key – So we’ve established that savings is important, but an even more satisfying way to get yourself more money for that house is not to get it from your own bank account, but to get it from your employers. You need to be prepared when that annual review comes around at work. Sure, you know you may be getting that 3% per annum bump, but that’s to cover inflation and won’t help in the long term. When you go in, be prepared to explain why you deserve this raise, show how you’ve improved, what major projects you’ve been working on, and what new duties you may have undertaken. What are people in a similar position in a similar company making in your area? Some financial analysts say you could be leaving as much as a million dollars on the table over your lifetime by failing to negotiate.
No one wants to be living from paycheck-to-paycheck their entire life and it’s the dream of many to be able to afford a place to call their own. These things may seem more difficult than ever now, but keeping these things in mind can do nothing but assist you in the long term, and maybe you can annoy your kids with this advice one day.