As a seven-year-old, I launched a business where I made $10 in two weeks through extensive marketing and key product placement to my second-grade class. In 2018 dollars, that’s equal to $712—not bad for a kid entrepreneur! When my dad heard how much I’d made, he pulled my braid and said, “Good job, little moneybags!” That sparked a passion in me to earn more, save more and share more.
Fast forward a lotta years and I’m teaching my five millennials the basic skills to master in their 20s to become financially savvy and stable.
It’s important to develop a budget and stick to it. Make sure it is realistic and accounts for all your spending—including entertainment, gifts and other splurges. If there’s more than one person doing the spending on the same plan, then mint has a good app you can use to track where those dollars are going. The three main parts of a good spend plan include the ability to: save diligently, share generously and spend wisely.
It’s pretty basic: saving=good and debt=bad. Don’t add to debt buying things you don’t need with money you don’t have to impress people you don’t like. Instead, put all “bonus” money toward debt such as income tax returns, bonuses from work and even a happy birthday check from your Grandma. This can also help you whittle down that average student loan debt of 35K+ and the average credit card debt of 8K. By paying off this debt early in your life, you’ll avoid thousands of dollars in interest and create margin in your life. In our 20’s my husband and I made the move to one car to get ahead on debt repayment and we don’t regret doing without for a little while to be debt free forever!
Spend Not and Want Not
Most millennials live paycheck to paycheck with a lot of financial stress hanging over their heads. You can break this cycle, even if you came by it honestly (from your parents’ example.) Readjust your mind set to look at extra money left over at the end of the month as either savings or debt repayment—not fun money to spend. As you are trying to spend less to get on track financially, you may get an extra roommate to reduce your rent payments or carpool to save on commuting. Go to happy hour for free food and be the designated driver, drinking water. Use Retail Me Not every time you buy anything (online or in a store) to get codes and other savings. Be creative in the ways you can spend less than you make each month.
Save for a Rainy Day and Beyond
Any smart millennial will have a few months savings in a rainy-day account to pay for that unexpected bill or an emergency. A super smart saver will also start tucking away money for retirement and take advantage of the miracle of compounding interest. In our Heroes at Home show, we share this slide that shows you how to invest in yourself.
Super Skilled Cooking Star
My twentysomething year olds love the food network and Pinterest. They especially like watching a client of mine, Amy Pottinger, a military spouse, compete on that network. But what’s the use of watching cooking shows if you never cook? According to the USDA Cost of Food at Home, you can save thousands of dollars each year by making your own food instead of eating out. In fact, by using apps to save money in the grocery store and getting coupons and tips from sites like The Coupon Mom, you can save even more. I added up all the money I saved over 20 years with sales, coupons, and eating in (instead of eating out) and the amazing total was $161,000, that’s enough to help put some millennials through college debt free!
Sometimes, there’s a misconception that becoming financially fit means you deprive yourself of everything fun and there’s no room for a splurge. Not true. You are just careful about what you will splurge on. That $20 glass of wine in a restaurant can go four times as far at Trader Joe’s when you splurge on a $20 bottle of wine (instead of the two buck Chuck.) Buying clothes that fall apart after one or two washes isn’t as smart as buying quality (on sale) that will last longer. An energy efficient appliance that saves you money in the long run is a better option than the cheaper version with a higher utility bill. Read up on products before you waste your money and realize that a strategic splurge here and there can save you significant change in the long run.
So, So, Happy
One of the reasons our family could go from being 40k in consumer debt to where we could pay cash for everything (including cars and college) is because we chose to be content. The more you choose to be happy where you are (knowing that’s not where you will always be), the better off you will be financially. You don’t have to drive a new car, live in the coolest place or take a mega trip once a month. I always said, “you can have it all—but not all at once.” It’s a choice, you can drive a better car and have more roommates. You can splurge on clothes and drive an old clunker. It’s all about choices and the biggest and best choice of all is to simply choose to be content where you are right now.
How many of these habits do you currently practice?