Some money matters have always been tough to address no matter which generation you are in. But for the sake of the millenials, let’s try to examine some of today’s important money matters that you should understand and know how to handle. If you’re a millenial who is a novice in managing your finances, below are some guidelines to help you make a sound decision.
Debts vs. Savings
One of the common questions people ask today has something to do with savings and debt. Should you pay debt first and save later or do both at the same time?
Most experts would recommend for you to start an emergency fund first then the next steps actually depend on you. There’s really no one perfect path to take when it comes to juggling debt and savings. If debt is sucking you up with high interest rates then it makes sense to pay the most expensive ones first. Savings also make sense since you’ll be getting a return on your investment in the process. Either way is correct depending on your situation. What’s not negotiable is the cash reserve. You should have a financial cushion to fall back into in case of emergencies.
When it comes to funding for retirement, starting as early as you can is imperative. With the rising costs of retirement, millenials are better off maximizing their employer plan as well as opening another account on their own. If you can’t manage both, grab whatever your employer offers and make sure that you’re maximizing your contributions.
As soon as you have some extra cash to spare per month, open a retirement account on your own. Then aim to build up both retirement accounts because you’ll never know what the future holds when it comes to inflation and taxes among other things.
Buying a home vs. Renting
We’ve all dreamed of owning our home. There’s nothing wrong with that. There is after all a certain allure and sense of satisfaction that comes with it.
Today, however, renting has become an increasingly better option financially. Renting certainly is not always right for everyone. If you can afford to buy a home, go ahead and do it as long as you know that you can afford it and it is right for your circumstances. The key is to not be swayed by what others think. Whichever route you take, buy or rent, you should be comfortable with the decision financially.
Another important money concern most millenials have a hard time choosing between is credit or debit. Taking it from the experts, you should go for credit provided that you can fully pay the bill at the end of the month.
Credit cards have received bad raps over the years because of its excessive interest rates. In today’s modern lifestyle, however, credit cards actually offer buyers with better protection. Again, as long as you can pay your credit in full, buying on credit may help you manage your spending better. Discretion on your spending is important to make this work to your advantage. Remember to only charge on your card purchases that you can afford to pay at the end of the month.
Eating in is still the better choice
Between dining out and eating in, the better choice seems obvious. When you cook and eat home, you are likely to save money in the long run. For most millenials who are used to convenience, this matter is actually a tough one. If you really want to save money, preparing you own lunch rather than eating out with your colleagues will pay off big time. Just try it for a month and you’ll be surprised at the amount of money you can save which you can then use for other investments.