4 Ways Millennials Can Creatively Budget To Fight Inflation

4 Ways Millennials Can Creatively Budget To Fight Inflation

Much attention has been focused on the millennials in recent years, specifically on their new-age hardships and criticisms from baby boomers. If you were born in the 80s or 90s, you’re a member of this group, nestled between generation X and gen Y. Finding success with money can feel like an uphill battle for many millennials—are you one of them? 

Nevertheless, millennials can find a way to break through financial barriers with an affordable financial advisor in the Bay Area at Humanity Wealth. 

By leveraging their greatest strength, creativity, the millennial generation has encouraged the use of social media, revolutionized business, and created an entirely new job category: the influencer. Discover viable financial strategies millennials can use to keep their finances under control, start some basic investing, and create a budget that works.

This article answers pertinent questions about budgeting for millennials, including:

  • How can you have fun while applying discipline to your spending habits?
  • What should you consider before making a large purchase?
  • What’s wrong with leaving all of your money in a savings account?
  • What are two basic forms of investment every young adult should know?
  • How can a wealth management advisor in San Ramon, CA help you financially?

Consider connecting with our advisors at Humanity Wealth through subscription-based financial planning. We serve both new investors and high-net-worth individuals. 

1. Have fun but spend with discipline

Everyone has their own concept of fun; the trick is to live a fun life while not feeling broke because living paycheck-to-paycheck is stressful, right? Achieving financial stability begins with having a bit of discipline in your spending habits. 

If you’re the type to spend every penny as soon as you have it, it’s going to take some changes in your mentality towards money to improve your finances. It’s not that you can’t ever spend money, but having some degree of financial discipline will keep you from wasting it on every misguided impulse. To build wealth, it’s crucial to decide which types of spending you’ll avoid so you can make more significant purchases in the future. 

Choose experiences over products.

One of the best ways to fight inflation is to spend on experiences, not things. As you get older, your priorities change—you start to care a lot more about experiences than material goods. Unlike most products, experiences are often remembered for a lifetime and can help you grow your network or learn new skills. 

Here are some creative examples of choosing experiences over spending money on things:

  • Going out to the beach with friends instead of shopping at the mall 
  • Volunteering at an animal shelter instead of buying a puppy
  • Taking cooking classes instead of buying fancy kitchenware
  • Take a date on a hike and picnic instead of an expensive restaurant
  • Go for a long hike instead of buying a treadmill
  • Workout outside to avoid spending on a gym membership
  • Learn to cook your favorite foods instead of buying fast food
  • Save your money for an adventurous trip that you’ll remember forever

Carefully consider big purchases.

Buying something expensive because you want it often results in buyer’s remorse or overspending because you don’t have enough information about what it will cost you in the long run. When buying big items, consider carefully if the purchase is necessary and does not negatively impact your budget. 

If it does not fit within your financial goals and plans for the future, then put off buying it until later, when you can afford to pay cash upfront. Before making a big purchase, take the time to confirm that it will benefit your life in meaningful ways. For example, buying a house, moderately priced vehicles, and spending on education are often wise investments for millennials. 

Ultimately, developing the discipline to control your spending habits can put you in a prime position to begin making smart investments. It’s this type of mindset that can take people from living paycheck-to-paycheck to building real wealth. Better yet, work with a financial planner to help hold you accountable. 

2. Implement basic investment strategies 

Since millennials and other young people have the advantage of time on their side, this is a perfect time to start making basic short and long-term investments. Even if you can just throw a hundred dollars into a Roth IRA or a CD at your local bank, it’s worthwhile. 

Investing in a tax-deferred account can be highly beneficial. These types of accounts are widely available to anyone, regardless of how much cash you have to invest. 

Here’s the problem with keeping money in your savings account.

Before you acquire knowledge of money and investing, having money in your savings account seems like a smart strategy. While the savings account will keep your money secure, it’s not ideal while we’re in a period of high inflation. 

Essentially, if the low-interest rate associated with your savings account is less than the current rate of inflation, you’re losing money. Since inflation is at a staggering 8.6%, the highest it’s been since 1981, your money is likely losing value if it’s sitting in a savings account.

Explore these basic investment options for millennials.

Consider these fundamental investment options that will help you begin building wealth: 

Certificate of Deposit

Available at your local bank, a certificate of deposit (CD) is a great way to start your investment journey. This type of investment is considered short-term since you’re lending your money for less than five years. 

Before putting money into a CD, it’s important to figure out how much you can part with and for how long. Once it’s invested, there’s typically a penalty for withdrawing it early, so it’s wise only to put in an amount you can forget about for the duration of the investment. 

Traditional or Roth IRA

If your job provides a 401(k), that’s ideal, but an IRA is a viable alternative for those who don’t. IRA stands for an individual retirement account, and there are two types with different rules that apply to each. 

Young investors may be better suited for a Roth IRA since you can take the money out without penalty. If you happen to pay high taxes, a traditional IRA offers the advantage of allowing you to reduce your tax burden, so it’s crucial to review each type before investing. 

3. Consider a side hustle for additional income

What do you love to do that brings you joy? One of the greatest ways to make more room in your budget is to expand it. By starting a side hustle, you can potentially build alternate sources of income that can help you in a variety of ways. 

The goal of a side hustle is not to replace your regular job. In fact, there are many ways that having a second source of income can actually help you in your day-to-day life and career goals.

For example, while you might be able to get by without the extra money from a side hustle at first, it can be nice to have it later on when things get tight or if you need some extra cash for something important like an emergency fund or school tuition.

The many benefits of a side hustle.

Aside from generating additional income from your side hustle, it may also provide social and marketability benefits as well. The people you get to know, the followers you acquire, or the new skills you develop may be useful in other aspects of your life. 

Whatever your passion is, you can try to teach, write about it, or create content for it online. This has the intrinsic value of working on something you enjoy, but it can also lead to new forms of expertise and legitimate job opportunities in the future.

Even if your side hustle isn’t necessarily a passion, having that extra income can enable you to do the things you want to do in life. It can simply be a smaller job you use for additional income. 

For example, dedicating weekends to freelance writing or driving for UberEats may give you the money to buy the DJ equipment you always wanted, thereby expanding your opportunities. Whether you’re pursuing a passion in your spare time, expanding your network, or creating new income streams, all are ways to improve your marketability vastly.  

4. Get help when you need it as you need it

You don’t have to do everything on your own, and this is especially true when it comes to managing your money. Our financial services firm in San Ramon is unique in that we provide financial planning support no matter how much money you have – through a convenient subscription! 

Think again if you’re considering a robo advisor versus a financial advisor. You can finally have a professional on your side to help with budgeting, education planning, tax planning, retirement planning, and more without being required to have a million dollars in assets to manage. We have an affordable pricing plan for every budget.

Humanity Wealth Advisors is here to help millennials like you to get ahead

If you need advice regarding your investment opportunities, feel free to call our team of experienced advisors

Our financial advisors in San Ramon and Newark provide affordable financial planning for millennials and beyond. We provide a wide range of financial services that can give you confidence that your money is in the right place for your unique situation. Connect with us at your convenience to learn more about us and how we can help. 

Need help budgeting and investing in the Bay Area? Our professionals at Humanity look forward to meeting you and your loved ones. Consider a subscription to our services when you’re ready to take your portfolio to the next level. 

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Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual. All investing involves risk including loss of principal. No strategy assures success or protects against loss. The economic forecasts set forth in this material may not develop as predicted and there can be no guarantee that strategies promoted will be successful. Contributions to a traditional IRA may be tax deductible in the contribution year, with current income tax due at withdrawal. Withdrawals prior to age 59 ½ may result in a 10% IRS penalty tax in addition to current income tax. A Roth IRA offers tax deferral on any earnings in the account. Qualified withdrawals of earnings from the account are tax-free. Withdrawals of earnings prior to age 59 ½ or prior to the account being opened for 5 years, whichever is later, may result in a 10% IRS penalty tax. Limitations and restrictions may apply.

More about the author: Harry Sherdil

As a fiduciary financial advisor at an independent firm, Harry strives to offer the same resources, tools, and research as bigger firms while serving new and existing clients' best interests.