These smart money tips for millennials will help get you on the right financial track!
Growing up, I was lucky enough to have parents that were good with money. Watching them manage their money and avoid going into debt set a good foundation for me. While a lot of my friends were racking up tens of thousands of credit card debt, I didn’t get my first credit card until I was in my mid 20’s, as a backup plan during the year I spent living in Paris. The card had a $2000 limit, and while I still have it, I’ve never actually used it. Although I avoided getting into debt during my 20’s, that doesn’t mean I was necessarily good with money; as the idiom goes, “money burnt a hole in my pocket.”
As soon as I got paid, I wanted to go and spend money. In fact, I almost felt like I had to spend money. What else was I supposed to do with it? Plus, there was always some party or event that I was going to that required me to buy a whole new outfit. I couldn’t possibly wear the same dress that I wore last weekend – what happens if someone noticed?
Looking back now, I realize how ridiculous my money mindset was. These are the 6 pieces of personal finance wisdom that I wish I could go back and give my younger self.
7 Smart Money Tips For Millennials
1. Save a portion of your income
As you can probably guess from my first two pieces of advice, saving wasn’t one of my strong suits. In fact, most of the time it didn’t even cross my mind to save money. Why would I save money, if I could just spend it? Great logic, huh? The only time I would save any money was when I was planning a trip to Bali, and then once I returned home, I would go straight back into my regular spending habits. I now automatically transfer a portion of my income into my Capital One 360 savings account.
Capital One 360 has no fees, and their current interest rate is 0.75%, which is WAY higher than the national average, of 0.06%. And to encourage people to save, they will give you a bonus $25 if you open an account with a minimum deposit of $250. Free money? Yep!
2. Start investing
It was only when I got married 5 years ago that I really started to learn about investing. Now that I know all about the power of compound interest, I wish I would have started investing a portion of my income a decade ago.
After doing a ton of research, I decided to open an investment account with Betterment. They’re an automated investing service that essentially does all of the heavy lifting for you. You just set your risk level (they’ll give you suggestions, but you can choose whatever you want) and then they take it from there. Of course, you can go in and change things up whenever you want to, but I’ve always followed their advice (even during the Brexit when a lot of people panicked and withdrew all of their money) and I’ve done really well with them!
Betterment has no minimum deposit to get started, which means that anyone can start their investment portfolio. I love that they’ve removed that common barrier to entry.
3. Payday doesn’t mean you’re rich
In one of the first jobs I had, I got paid monthly, and unfortunately, this didn’t bode well for me. Every time the 15th of the month rolled around, I would have dollar signs in my eyes when I saw my increased bank balance. Because it was 4 weeks of wages, it was a good chunk of change (back then!) so it made me feel like I was rich. What I failed to remember was that that money had to last me an entire month. Oftentimes, I would get to the last week of the month with no money left for gas, and I’d have to sweetly ask my Dad for $20.
4. You don’t need another pair of shoes
Shopping for new clothes was a regular occurrence for me, but shoes were always my weakness. For quite a few years, I was probably buying a pair of shoes every couple of weeks – I remember having 5 pairs of black ballet flats that were only *very slightly different. I recently held a yard sale and almost every woman that came commented on how many shoes I was selling (*hangs head in shame.) I have drastically reduced the amount of shoes I own, and it feels great. A side benefit of this is that I don’t have such a cluttered closet floor anymore!
5. Just because something is a bargain, it doesn’t mean you need it
Part of the danger of “leisure shopping” is that I would always find “bargains.” Sure, it’s awesome to find bargains, but it’s only a bargain if it’s something you truly need. That’s part of the reason why I had 5 almost identical pairs of ballet flats – “they were a bargain!”
6. Buying things won’t make you happy
When I was younger, my number one line of defense against feeling depressed was buying things. I remember feeling a rush of excitement when I would purchase something, and I loved walking through the mall with bags of new clothes, shoes, jewelry, and makeup. Then I’d get home, put them all away, and the realize that the high I felt was already gone. “Things” don’t make you happy.
7. Start a side hustle
Now that I know the amount of money that can be made by starting a side hustle, I wish I would’ve done it sooner. Instead of spending all of my spare time watching TV, I would’ve used it to start a side business (which I could’ve done while I was watching TV!) or even complete online surveys.
What money advice would you give your younger self?