9 financial tips that the Generation Y can learn from
If you are one of the many 20 and early 30-somethings — also known as the Generation Y — then financial concerns are probably affecting you in a way that they have not before. Your monthly paycheck, if you have one, perhaps doesn’t go as far as you’d hope it to. Even if you’re at the best shape of your life, health insurance can still be costly. And now, fewer companies provideretirement plans.
Unsurprisingly, more than half of employees aged between 21 and 32 actually claim that they are living one paycheck to another, as per a recent survey by insurance companyMetLife. Nearly 75% of the respondents are worried about trying to make ends meet.
Fortunately, you can get off to a good financial start with these nine tips and strategies.
1. Respect and acknowledge debt
Debt can be painful if you don’t get it under control. It restricts your career choices, as well as your chances of getting your own house and usually leads to tension in interpersonal relationships. The 20s and 30s can be a person’s most expensive decades. You’re now looking for a place to live and might need to getyour own car and overhaul your work wardrobe. And unfortunately, you’re still at the low end of your income potential. Thus, you will need to closely track your spending and cut unnecessary waste to avoid making poor choices that lead to high outstanding credit card balances.
2. Save up
To begin, you’ll need a financial cushion to cover your needs during periods of unemploymentand any unpredictable expenses. Afterwards, start saving up for your retirement as soon as possible. At your 20s and 30s, this may seem like a pointless exercise, but money saved for retirement will never be a waste as the benefits will outweigh any inconvenience you feel right now.
3. Assess your current career
It has been said – “you are your biggest asset.” Nowadays, it’s not unusual to earn over a millionthrough the course of a lifetime. Think deeply about where and how you will earn your income. Although many of us want a career that we can enjoy, it is also goodto consider different paths that may impact financial security. When changing jobs, it is best to transfer the retirement funds you have set up with your previous company, as spending it will lead to penalties and taxes that can eat up 25% of your savings.
4. Give education a thought
In this time and economy, you must take a hard-nosed evaluation of your education. If you started college but didn’t graduate, then go back. Finishing school has huge rewards. While an additional degree or certification is always great, try to think practically. Think about the pros and cons of getting a master’s degree vs. a vocational course that can help you expand your knowledge.
5. Be insured
You are not invincible. Furthermore, given sometimes we are only one sickness or injury away from bankruptcy, getting health insurance is a must. Consider it, if your employer offers one. These are usually better deals than options given to individuals.You may also want to think about disability insurance if you have an injury that keeps you out of work for a certain period of time. Although the probability of this happening is low, the risks are too high and we wouldn’t want to feel sorry if ever it happens.
Getting homeowners and/or renters insurance is a smart move. Even if half of your furnishings are not of the best quality, having to replacethem in the event of an emergency would still be painful.
Also, if your family depends on you for incomes, then you should get life insurance to ensure that they can receive a substantial amount of support should anything happen.
6. Consider other housing options
Your living arrangements must be safe, yet inexpensive enough that you can still savewhile being flexible enough in the event that you’ll have to move out.One good idea is to stay back with your parents’ for a year or two. This allows you to save much on your rent and other expenses. But of course, you should be smart and disciplined about the money you will get to save.
If you must rent, then consider getting roommates as this helps manage the monthly payments. Furthermore, you’ll get to experience having to live with someone else.
7. Budget, budget, budget
While major expenses are hard to overlook, you must also look out for smaller yet ongoing expenses such as lunch money and gasoline. If you add these up, the totals can actually shock you.
8. Have the (money)“talk”
While discussing money with your partner isn’t really the most romantic of topics, it is much better to find out right now if your future spouse is actually hiding behind walls of debt. Ask questions that you may find uncomfortable, as this will also test the strength of your relationship.
9. Be sure to prepare before thinking of starting a family
It sounds like a buzz kill to say that you need to consider finances when you think about starting a family, but it’s the truth. You can cut corners all you want, but kids are really expensive. Apart from the gear you’ll need, having a baby usually means spending some time away from work. Start pooling some money for this milestone of your life before you are knee-deep in feeding bottles and diapers. Although the economy has been hard recently, you still have a few things left in your favour.