Sure, creating a budget may not be fun, but it’s an important part of “adulting” for everyone (especially you, millennials). Not only does it help you know how much you can afford for things such as buying a car or paying rent, but it also helps you know which weeks you can afford date night or which months you can plan a weekend getaway. Here are four tips for millennials from the financial experts at Suffolk Federal that will make creating a budget easier than creating a Match.com profile.
- Create a “real” budget. But we don’t mean to simply say you’re going to cut back on “Happy Hour” and fine dining. When you create a budget, you should start by adding up your monthly expenses—this includes debts you may have, living expenses such as rent, utilities, transportation, food and extracurricular activities. To keep things organized, input this information into a spreadsheet. From here, you can begin to subtract your expenses from your monthly income.
- Crunch the numbers. Once you have an idea of where your expenses line up with your income, you can start to get into the nitty gritty. Just remember to revisit your budget as time passes and when you experience any life or financial changes. The following is a good rule of thumb for budget distribution:
- 50 percent toward living expenses
- 20 percent should be divided between regular savings, an emergency fund and paying down debt
- 30 percent for entertainment
- Learn healthy habits. Just like when you start a new diet or workout routine, it doesn’t work unless you stick with it. Here are five ways to help keep you on track:
- Write down you financial goals. This will help you stay focused on your goals.
- Monitor your credit score. Since this is such an important aspect of your finances, it’s important to know how and when your number changes.
- Have a separate email. This enables you to have stay organized with any financial correspondence, bills and alerts.
- Set up an automatic savings plan. Each month, contribute 10 percent of your income to this account. To make things even easier for yourself, find a savings plan that racks up the dividends for you.
- Try to lessen debt. Look into student loan forgiveness programs and consider consolidating your debt. And when you can, try to pay extra money toward your debt to lessen the interest paid.
- There’s an App for that. As a millennial, you know that apps can keep your life organized from how many steps you take and what you eat—your finances are no different. Use apps such as Mint, Wally and Level Money to help you stay on top of your finances.
For more tips on how to create a budget, contact the experts at Suffolk Federal today!