Here are six money management tips all millennials must be well-versed in to keep up with the rising cost of living. Read on to find out what they are.
Who are millennials? There’s a good chance you’re probably one of them. Researchers broadly agree that those born between the 1980s to early 2000s fall in this category. So, for the sake of convenience, let’s agree with the researchers. You probably know the millennials as Generation Y. We’ll bet that rung a bell.
So why are we talking about millennials or Gen Y? Because the oldest of this lot are in their 30s, which means they are ready to take the baton from their predecessors – Generation X. Gen X are those born in the between the 1960s to the 1980s – in short, our parents. As our parents near retirement, the responsibility to run the world will gradually fall on our shoulders. Hence, we need to be ready to take charge.
Additional Reading: What Millennials Have To Say To The Baby Boomers
Now, the birth years of the millennials coincided with rapid advancements in technology, globalisation and a rise in the purchasing power of people around the world. Hence, the financial principals which worked wonders for our parents won’t work half as well for Gen Y today. So, to keep in tune with the changing ways of the world (primarily the financial industry), we (millennials) need to get well-versed with the following financial habits.
Dump the archaic, learn the new
Parents are the primary guiding force behind the financial habits of their children. However, millennials found that much of what they were taught about financial management is either archaic or redundant in the 21st century.
This is not to say our parents were wrong. It’s just that money management suggestions from our parents fell a little out of sync with the current workings of the world economy. Nothing cataclysmic, however, so no need to worry.
What the millennials need to understand is that they must forge their own path to success, both material and personal. They have options that their parents didn’t. Hence, Gen Y must learn to take stock of things from a fresh perspective and make informed decisions.
Where Gen X would have preferred to invest in a Fixed Deposit, millennials are exploring short-term debt-funds. See the difference? Millennials need to compare the old with the new and see which fares better for them.
Another phenomenon the millennials need to keep pace with is the introduction of new financial products every now and then. Our parents had the luxury to choose from a few. Our generation is spoilt for choices. Though this is an advantage, we need to be extra cautious when making our picks.
You have to be a Jack of all trades
Remember the bit about finding your calling and then pursuing it till you either drop dead or make it across the bridge. Well, sorry to break it to you but this might have changed slightly. You still need to make it across the bridge, but the key to making it is versatility.
Knowing and specialising in just one skill doesn’t cut it anymore. In fact, this will have you at a disadvantage. There are people out there, who can write, design, create a website, promote their products and oversee marketing and advertising all at once. You get what we are talking about, right?
Rather than specialising in just one trade, you are expected to know a little bit about everything. Blame technological advancement, globalisation, etc, but the fact is that knowing more than what you are supposed to know is what works in the 21st-century world.
This might sound stressful but there are many advantages to it. Think about it. You are self-sufficient and you can pretty much accomplish all that you want all by yourself – keeping your financial life on track all by yourself.
But remember to keep an open mind and listen to ideas other people may have. There is so much to learn and you will be able to build on your knowledge only if you become a good and a patient listener.
Mastering money management
In spite of a gargantuan jump in the purchasing power of the Indian populace, millennials are some of the worst money managers. One reason being that millennials grew up in a world where spending and living a life of excess was encouraged. The introduction of the cable TV gave a boost to advertising companies, who tapped into the increasing purchasing power of the Indian middle class.
Hence, we millennials learned all about spending and very little about saving. Moreover, a financial tool such as Credit Cards and Personal Loans took the blame for awakening the spenders in each person. But of course, we learned the hard way that loans and Credit Cards, if used wisely, can help plan finances effectively.
A very important reason why millennials must learn to manage their money is that an increase in the purchasing power of people is accompanied by a spike in the cost of living. Hence, the millennials must learn to restrain themselves when money flows into their accoumnts and instead focus on saving and making smart investments.
The cost of living is only going to increase in the years to come. If the millennials don’t start managing money today they’ll struggle to make ends meet at a later date. Things are not the same for millennials as it was for their parents. Hence, they must take responsibility for their finances at the earliest.
Don’t bite more than you can chew
Needs and wants run the world economy. If everybody settled for less, the economy would collapse. However, we aren’t promoting ‘give in to your needs’ behaviour. What we are getting at is that there will always be fancy and cool things to purchase. Though it’s absolutely cool to give in to temptation now and then, you must know when to apply the brakes. The crafty advertising agencies will not stop until they have extracted every last penny out of you.
Now, moving on to bigger expenses. Millennials want it big. They want a car, a house, branded clothes and accessories all before they can afford it. Take it easy, guys. Nobody is stopping you from living a lavish life, but you must earn it.
Don’t start spending as soon as you get some money. First, build your savings, strengthen your investments, create a strong emergency corpus and then spend. Yes, you’ll be able to afford this and a lot more if you are prudent with your money.
You are your best investment
Millennials – you are your best investment. Don’t you like to go out, live a fancy life and spend lavishly? If you want to be able to continue to afford this lifestyle then you must invest in yourself. Investing in yourself doesn’t mean donning luxury clothing and vintage watches. It means building your skill sets.
What’s your line of work? What are your hobbies? Invest in skills that’ll help you get ahead in your career. Remember the point about being a Jack of all trades? Other than honing skills necessary to your line of work also invest in skills that will allow you to make a career change (if need be). Also, keep an eye on the skills most in demand and learn them. This is a smart way to stay ahead of the curve.
But no matter what you do, keep upgrading your tech skills as frequently as Apple upgrades its phone. We don’t need to explain this point, right? Tech has taken over every aspect of life on this planet. Don’t be surprised if teleportation becomes a reality soon.
Get fit with your money
Off late, health and fitness has gained widespread popularity. Fitness companies are creating innovative work-out regimes almost every other month. Millennials have indeed warmed up to this fad nicely. So, along with getting the most out of you exercise regime, also get the most out of your money.
Do you know you can choose to get very little or a lot out of a simple Rs. 100 note? How far you can stretch the purchasing power of your money will depend on how much effort you put into it. The next time you spend, think whether the purchase is worth the price.
Additional Reading: Money Habits of Millennials
It’s very important for millennials to be careful with their money. Everything in the 21st century moves ahead at lightning speed. Although it’s all very stimulating, you might lose track of your money.
So keep pace with all aspects of your life but slow down on your spending. Look at money as something you must manage and multiply. Find out ways and means of growing your money and you won’t ever have to ever worry about spending.