Millennials, known to be born between 1981 – 1996 have shown great interest in investing. They are now known to take up a certain percentage of investors and so the term Millennial investors are on the rise. If you’re part of the younger millennials, that is the currently mid-20s to 30s, you probably have a lot going on already. And if investing and budgeting or getting your finances together is one of them, then this article is for you. Here, we’ve listed down 7 budgeting guides for the millennial investor.
We hope you can kickstart your journey in investing once you’ve got your budgeting and saving money on point.
1. Learn how to create a budget
First on our list of budgeting guides for millennials and millennial investors is to learn how to create a budget. You might have already encountered this a lot of times but trust me, getting your budgeting skills on point will get you far.
Learning how to create a budget starts with identifying wants vs needs. At the age of 20s to 30s, you might already be paying for your bills or supporting your family. Those types of things should come first in your budget guide. Always make sure you have enough for your needs and that you know where your money is going.
Creating a budget will help you save money effectively and keep your financial priorities straight. And to take it up a notch, this budgeting guide can also be applied to your investments especially if you’re a beginner.
2. Set your Goals
If you’ve already started investing for some time now, you’d know the importance of setting goals. In this case, another budgeting guide for millennials is to set goals financially.
For beginner investors or for those who are still learning about investing and just doing their advanced research, setting goals means knowing what you would like to achieve with your finances.
We already know it, earn some extra, pay the bills, treat the family, those are the basic ones. But when you start investing, you should also know how much would you like your money to grow? How long would be your ideal investment timeframe? These are some of the questions that must be answered when setting financial goals.
3. 50-30-20 rule
This 50-30-20 rule is a known budgeting method developed for money planning. This method can help millennials on their budgeting journey as it creates a percentage allocation on how to spend your income.
The rule goes like this: 50% for needs, 30% for wants, and 20% for your savings. The specified percentages are assumed after taking the tax and deductions in your pay. So, if you’re having a difficult time creating a budget on your own, this budgeting guide can be perfect for you.
4. Know your expenses
Part of learning how to create a budget is knowing your expenses. If you’re used to just spending money, here and there, well, you should change it.
Some people no longer track their expenses after settling the necessary bills and payments as long as they are already done, they’re done. But if you keep on doing that, you don’t leave any money for investments. How will you start investing if you leave no room for it?
On the other hand, some people do not want to track their expenses because it becomes an eyesore to them. This is why after you track your expenses, you should minimize unnecessary expenditures.
By knowing your expenses, you will be able to identify a pattern and eventually learn to build discipline on that part.
5. Be Realistic
From Creating a budget to setting a goal, you should learn how to manage your expectations.
Setting a goal too high is a common mistake people commit when it comes to their expectations especially when it comes to money matters. Just because you think you see the light at the end of the tunnel while setting a budget, doesn’t mean everything will go well.
On this budgeting guide, being realistic meant making margins on your savings and setting realistic goals. Do not commit to something you cannot do because you will only be the one to get disappointed in the end.
And when setting your financial goal, be sure that it is up to our capacity. You may opt to try smaller goals first and eventually expand them so you can also see personal progress.
6. Multiple Sources of Income
When it comes to budgeting and investing, we know that not everyone has the resources to start it. Maybe some people are too deep into debts and expenses that even with the previously mentioned budgeting guides will not be able to help.
Thus, creating several income streams is one of the budgeting guides for millennial investors. Don’t be ashamed of doing extra work. After all, you’re here to learn how you can possibly start budgeting and investing.
This budgeting guide will help you settle your debts or make room for other expenses. Doing this will ensure that you no longer have to live from paycheck to paycheck. And once you get the hang of it, this will surely bring a lot of knowledge and income.
7. Monitor Your finances
Overall, the budgeting guides listed here can be summed up into monitoring your finances. But the difference here is that you’re not only monitoring your basic wants vs needs expenses or 50-30-20 rule attempt.
By monitoring your finances, you should also be able to monitor your progress. Were you this bad at saving money as you were last year? Have you come around your previous money mistakes? Were you able to increase your annual savings now versus last year? These are the things you should also monitor if investing is in your mind.
Investing is a lot more complex than regular savings and budgeting and there are more things to consider. Being able to master these budgeting guides laid out to you and knowing your investment opportunities will help you kickstart a wonderful portfolio.