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Millennials! Feeling Broken By Your Budget? Here’s 5 Money Tips

Urban millennials are broke and struggling to keep up with their new found financial independence. 

Updated
Life
5 min read
Money management tips for young people. 
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“I know a young marketing executive who bought a car with her first salary, and now sleeps in it. Between rent and loan repayments, she was starting to starve”, says Gayatri Jayaraman in her book Who me, Poor? How India’s Youth is Living in Urban Poverty to Make it Big. The book opened to rave reviews, with contradictory opinions pouring in from all quarters.

While the word “poor” may be problematic. It resonates, seems familiar, and (if I may add) is very much a part of the lived experience of the 20-something metro dwellers. More often than not, it is poor money management coupled with unrealistic expectations that lead to financial distress of the millennials.

Empty wallets are a reality for several young people who have difficulty managing their finances. 
Empty wallets are a reality for several young people who have difficulty managing their finances. 
(GIF Courtesy: Giphy)
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But you can find your way out of the muck. Here’s a little help from us:

1. Live Within Your Means

Millennials! Feeling Broken By Your Budget? Here’s 5 Money Tips

Millennials beware! The temptation of blowing your salary on fancy clothes at swanky malls is real. But at the risk of sounding preachy, I’d say the first rule of not perpetually running into debt is living within your means.

You may have dreamt of owning a Yash Chopra movie-esque home, but overspending on rent may cost you heavily. Make sure you are not spending more than 30 to 35% of your salary (after tax deductions) on your monthly rent. Abide by the “50, 20, 30” rule when it comes to spending, suggests a report published in Vogue.

This essentially means allocating no more than 50% of your income to necessities and essentials such as rent, groceries, transportation and utilities. 20% should be kept aside for future goals and distant dreams, while the remaining 30% should be used for leisure.

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Of course, it is essential to rethink necessities. Remember, indulgences, which often pass off as necessities, are setting you back substantially. Ask yourself whether you need Netflix, Amazon Prime, Hotstar and more? You may certainly need few, but definitely not all. Do you need to take that overpriced Ola or Uber to work daily when you can easily carpool or take public transport? Can you not switch to cooking instead of ordering food daily?

Smart money management is all about striking the right balance between needs and wants, especially when you have just started off. 
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2. Investment Is Not Just for the Elderly

Millennials! Feeling Broken By Your Budget? Here’s 5 Money Tips

Start investing early to reap benefits later. Time is the biggest asset for millennials, which increases their risk taking capacity while making investments. Explore investing options such as RDs (recurrent deposit), FDs (fixed deposit), and SIPs (systematic investment plan) to find out what works best for you. It deems good to diversify investments, however small the amount is. This way your risk for losses are reduced exponentially.

The more you educate yourself about investments, the better it is. Hence, never invest based on the recommendations of a single person. Read, explore, research and then take a decision. Once you find what ticks for you, keep re-investing to keep the momentum going.

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3. Start Saving

Millennials! Feeling Broken By Your Budget? Here’s 5 Money Tips
If you think that blowing up money on that fancy trip may give you the much needed validation, you sure are underestimating the worth of contingency fund.

Having nearly three to six months of your monthly earnings saved up, you are giving yourself a chance for self-growth. How, you may ask? This buffer amount may afford you the luxury of switching jobs should you feel tied up in the current one, or even give you the much needed mental space to sort things out before jumping on to the next, just for the paycheque.

Emergency saving fund is indispensable. Everything cannot be insured, nor will you have mammoth investments in the initial stages of career, but you can always save some money for things that show up out of thin air. Plan in advance to escape a rude shock later!

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4. Get Insured

Millennials! Feeling Broken By Your Budget? Here’s 5 Money Tips

To achieve financial stability, you need to arm yourself against the unknown and the unseen. The worst financial emergencies can be averted with a few smart moves – insurance being the most crucial. What if your laptop stops working all of a sudden? Sure you have important data saved up elsewhere, but the financial costs may be a huge set back. Likewise, you may fall sick or your car may break down. Getting insurance saves you many a hassles, and keeps you armed should you meet a financial catastrophe.

One important tip: Don’t shop for the insurance plan with the lowest price tag. Instead, opt for the one that offers adequate coverage as per your needs. Who said you can’t ask your insurance agent for discounts? Display all your bargaining skills millennials, and strike the best deal for the plan you need. Sometimes, taking multiple insurances (let’s say health and auto) from the same place helps bag a good deal.

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5. Educate Yourself about Money

Millennials! Feeling Broken By Your Budget? Here’s 5 Money Tips

The biggest trap that millennials fall into is thinking that finance is complicated. Most youngsters often find themselves putting off saving or investment plans just because it looks intimidating. Financial literacy is not rocket-science, it is just an extension of common sense. Sure, it is not taught in schools, but it’s definitely not something you can’t educate yourself about. Once you get a hang of it, you are good to go.

Talk to your parents about finances. You may be surprised to learn some life-saving hacks from their experience. Similarly, do not shy away from asking questions to your banker. Educate yourself about everything from investment schemes to smart investment options. Install apps that help you achieve financial maturity, follow blogs and websites that know about money and finances. Remember, every little piece of information adds up.

(Disclaimer: Being a millennial myself, I have tried some of these and trying harder to follow the rest.)

(With inputs from Business Insider, Forbes)

(At The Quint, we are answerable only to our audience. Play an active role in shaping our journalism by becoming a member. Because the truth is worth it.)

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