7 Tips To Help Millennials Improve Their Financial Literacy

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7 Tips To Help Millennials Improve Their Financial Literacy - PenFed Your Money Blog

It’s easy to be intimidated by personal finance, but don’t be afraid. With a little common sense — and some work on a budget spreadsheet — you can become a financial pro in no time at all. We have 7 tips that will help you take your financial future into your own hands.

#1 Make a budget and follow it. Budgeting may sound scary, but it’s surprisingly simple. All you have to do is take a hard look at what you make and what you spend — and then write it all down. Break all of your expenses into categories to see just what you spend on what. Are you spending more than you make? Then you can use this to figure out where you can cut down. Finally, turn that list of expenses into a list of what you plan to spend on different things every month — and do your best to stick to it. Congratulations! You now have a budget.

#2 Cut any costs you can. Even if you aren’t living beyond your needs, it never hurts to have a little extra cash every month to save or pay down debt. Some of your monthly bills could be easy to cut by calling your service provider — or switching to a new provider entirely. If you’re struggling with credit card debt, consolidating your bills on a low interest balance transfer card might cut your costs and help you pay it down faster.

#3 Set financial goals. You aren’t jumping through these hoops for no reason: you have financial goals you want to reach, and this will help you reach them. But your goals will be personal. Are you need of a new car? Interested in homeownership? Your goal may be to save for a down payment. But goals don’t have to be big: maybe you just want to upgrade your old tablet or invest in a smartwatch. You can set aside a little cash every month until you can afford it, which will help keep you out of debt. Set goals that make sense for you — and help motivate you to stick to your financial plan.

#4 Start saving. It may seem easier to live paycheck to paycheck, but then you’re always just one financial emergency away from disaster. No matter what the number is, you should work savings into your budget. If you don’t have any savings, start by making an emergency fund. It’s just what it sounds like: cash to tap into when you have a financial emergency. Be sure to put it in its own account so you aren’t tempted to tap into it for everyday expenses.

#5 Understand and start building credit. Your credit score may sound mysterious (or even frightening), but having a good score is mostly following financial common sense. You want to pay your bills on time and avoid getting into too much debt. If you’re going to fall behind on a bill, contact your credit card or service provider in advance to work out an arrangement — your credit score will thank you. What isn’t self explanatory is that you need credit to get credit. You want to get and use a credit card, which will help prove to future lenders that you can use credit wisely and pay your bills on time. If your credit isn’t good enough to get a card, look for a secured card to help build your credit. Need more details? Check our post about building up your credit score.

#6 Pay down your debt. Whether student loans or credit card bills, paying down debt is part of any good financial plan. Make sure your budget leaves room for debt payments and start paying down your higher interest debt first. If credit card debt is a problem, remember that a balance transfer credit card may help you pay it off.

#7 Don’t beat yourself up over a setback. Everyone has made their share of financial mistakes. The important thing is not to get discouraged and give up. Focus on fixing the problem and how you can avoid repeating the mistake in the future.

Have you considered a credit union? You’ll find that credit unions like PenFed offer better rates, fewer fees, and great member service, while offering the same financial protections you’ll find at banks. Just compare our checking and savings options to your bank’s: you’ll probably find PenFed can help you save some cash by cutting down on fees and offering more dividends on your savings. Open an account today!

Posted in: Personal Finance, Saving Money
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