Budgeting For Millennials – A Simple Process Can Help You Achieve Financial Freedom

Budgeting For Millennials – A Simple Process Can Help You Achieve Financial Freedom

If you’re a millennial, there is a chance you’re feeling strong financial pressure. From student loans, rising rent, and monitoring spending habits, it can be tough to meet your financial goals. 

However, don’t fret- budgeting for millennials doesn’t have to be difficult. As a matter of fact, with a clear financial plan and some budgeting tips, you can pursue financial freedom. Continue reading for tips on getting started!

Budgeting and Why You Need it

A monthly budget can help you save money and create more financial stability. By following a plan, paying your bills on time, growing a savings account, and retirement planning are made significantly easier. A budget includes a summary of your income and expenses and it helps to ensures you are not living beyond your means in such a way that your expenses are higher than your income. 

A budget can help to put you in a stronger financial position over your personal finances for both the long and short term. 

The Basics of Creating a Budget

To create a budget, you first need to keep track of all of your income, from your regular job to any side hustles. Next, you will need to keep track of all of your expenses. Now you need to begin to allocate your money in such a way that fits your needs and goals. Of course, you will want first to ensure that all of your expenses are covered, and then you can delegate money towards investments and spending money. 

Following some sort of budget framework can help. For example, many people use the 50/30/20 method. In this framework, 50% of your income goes to expenses and needs, 30% goes toward wants and spending money, and finally, 20% goes towards savings and any potential debt repayment. These parameters aren’t set in stone and can be adjusted according to your own unique financial needs.

Sticking to your Budget

Your budget won’t mean anything if you don’t stick with it. That will require discipline that needs to be exercised daily. Budget discipline can range from not overspending on dining out daily to being diligent about putting money towards retirement plans, such as a 401(k), or Roth IRA, on payday. 

As affordable financial advisors in San Ramon, we specialize in financial planning for millennials in the Bay Area. Our financial planners can help you develop a simple budget catered to your unique needs to help while you you work toward your goals.

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Tips for Millennials Just Starting Out

Budgeting, saving, and investing can be intimidating, especially when you are just starting out. Use these tips as a guideline to help you maintain your budget and financial discipline:

  • Quit Ubering everywhere: Although being chauffeured about town and having food delivered on a whim is nice, it is uber expensive. With some millennials spending over $100 a month just on ride shares, don’t be complicit in such a bad spending habit. Imagine how much better use you could put that $100 towards instead of frivolous rides and meals. 
  • Ease up with shopping online: Although online shopping hysteria is not unique to millennials, it is a growing problem. Although there are some great deals, ask yourself if your purchase is really necessary. After all, the easiest way to double your money is to fold it in half and put it back in your pocket. 
  • Evaluate your subscriptions and apps and choose what is necessary: How often do you use the subscriptions you pay for? Is it enough to justify whatever you pay per month? Try deleting certain apps to help fight the urge to spend frivolously. 
  • Sleep on it – Wait before making purchases: Patience is a virtue. Waiting one night isn’t all that long, especially with the speed of online shipping in 2022 if you decide you need the purchase. 
  • Manage your time better: How you do anything is how you do everything, and if you plan out your schedule and delegate your time, you will be in a better position overall. 
  • Get a bicycle, walk, or take the bus: There are plenty of alternatives to driving, and they can be beneficial to your health as well
  • Go grocery shopping the old fashion way, with a list of only what you need: Although some millennials spend upwards of $500-$1,000 per month on food, experts recommend 10-20% of your income as a solid baseline for what you should be spending on food. 
  • Use coupons: Coupons are available everywhere, from online to in-store. Use them to take advantage of deals and savings that will add up significantly as the months go on. 

Following these tips may be challenging, but being vigilant can reinforce good monetary habits over time while repealing bad ones. Luckily there are a slew of good budgeting apps to help make the process as smooth and seamless as possible. 

The Benefits of Budgeting for Millennials

Simply put, abiding by a realistic budget tailored to you and your financial situation can do wonders for your financial standing. Opportunity favors the prepared, and the stronger your financial standing, the better chance you have of achieving financial independence. Budgeting your money effectively may help you allocate your finances better, affording you better health insurance, lower interest rates, and improving your credit score. 

Final Thoughts

Budgeting should be a necessary process as a way to get your personal finances in order. If multi-billion dollar companies must budget, what makes you think a household or individual should be any different? Budgeting should not be seen as a chore but rather a second nature habit. 

As affordable financial advisors in Newark, we can help you formulate a budget that fits your circumstances so you can control your spending, live within your means, and pursue your financial goals. 

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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.