A recent study found that the three most important indicators of becoming an adult for a Millennial meant becoming a problem solver (49%), becoming a decision maker (59%), and gaining financial independence (60%). Although a clear definition of what ‘financial independence’ means in this particular study wasn’t provided, let’s assume it’s the ability to independently generate income to pay off one’s expenses without exhausting discretionary income.
Contrary to naive childhood beliefs (that belief being if Lauren Conrad (The Hills) can move out of her parents house at 18, drive a BMW, and party at Les Deux in Hollywood every night then so can I) attaining financial independence is no easy task. It’s the less glamorous world of part-time employment, investing, and/or saving your money to hopefully fund a new outfit, three drinks at Phil’s, and a slice of pizza (priorities, right?). The fear of missing out on parties, events, food, clothing, or travel, can distract us from achieving our long term goals of investing in our education, paying off student debt, and becoming financially stable which we believe to be a marker of adulthood.
So how do we find a balance between living for today, and accomplishing our future financial goals?
Monitor your spending
Ignorance is NOT bliss, and consciously ignoring what you spend your hard earned money on won’t help you reach your long-term goals. Thankfully, there are various different tools to help monitor spending. One such tool is a financial tracker that many banks may include with your account. Based on the transactions of your bank account, the tracker breaks down your expenses over a specific time period. This tracker can be a rude awakening on how much money you spend unnecessarily, and your first time looking at these charts will have you saying “I didn’t even think I had that much money to spend…”
Living on a budget
This doesn’t have to be as unglamorous and restricting as it sounds. Living on a budget just means you’re allowing yourself to say “no” to unnecessary social gatherings or purchases, so when the time comes to attend an event or make an important purchase you’ll have the necessary funds to do so comfortably. Depending on your income and expenses, set a realistic monthly budget for yourself. It’s encouraged you track your spending on a weekly basis to ensure you’re keeping under your monthly budget.
Setting a limit on your spending would mean cutting back on certain expenses, but they don’t have to be large compromises. Small changes like using a coffee mug instead of buying coffee, meal prepping for the week, pre-drinking instead of purchasing drinks, and even using cash over a debit/credit card can significantly impact the amount you spend on a monthly basis (for the better). When it comes to shopping, you can take advantage of online shopping to compare your options and find where the best deals are so you can make informed purchasing decisions. Another trick is to create and buy a whole outfit to avoid purchasing one-off pieces that sometimes go to waste.
Savings will save you
One of the smartest decisions you can make when it comes to managing your finances is to actively save. It doesn’t have to be in large portions, it can be as small as 5% from each of your paychecks but for a lengthy period of time. You can compare different banks that offer the best savings accounts with competitive interest rates. If your pay is directly deposited into your account, you have the option to request a portion of it to be directly deposited into your savings account. The idea with a savings account is that it’s a long-term plan you can set in motion that will collect interest, and you can forget about it until you require those funds again in the future.
Goalkeeper is another great tool that can help you save, check out this app here.
Becoming financially independent may seem like the be-all and end-all of adulthood, but it doesn’t have to be as hard as everyone makes it look. Following tips as easy as these can put you on the right track to being much more aware and in control of your finances!