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Budgeting For Millennials – Financial Literacy & Debt Help

Whether you are just getting your first part-time job or are starting out your career, having that regular source of income is a great first step to building up your financial health. Many people will give you financial advice and tell you that you should always budget your money (and you should!). But how do we really figure out how much to budget FOR?  

Do you know how much you actually spend on groceries, takeout, gas or on nights out? Tracking your spending is a task for all individuals, at any age, but for those just finishing up at College and University, and starting out on their own with a new job, and debts to pay, is a task worth the effort.  

Track your Spending

Many of us will “guesstimate” how much we spend in these areas and plan around the rough estimate in our budget. But sometimes it seems that at the end of the month the amount we should have in our account based on our budget doesn’t match up with what we actually have left in the bank!

If you are finding yourself asking ‘where does the money go?’ then that is a definite sign you need to track your expenses. Using a banking app or tracking app such as Mint – or keeping a small notepad in the glove compartment of your car and writing down every single dollar you spend in all areas of your life. It will allow you to sit down, do the math, and get the reality of your monthly spending. Having these real numbers will put you in a better position to plan the budget out accurately or help you identify any potential overspending you were not aware of.  I’m looking at you, Skip the Dishes!

Take advantage of the time living at home

Many people are eager to start their independence and move out at the first opportunity, but if you are not quite at that stage or if you have the ability to stay a little bit longer at home with family, this can be a great opportunity for you to build your financial cushion or pay off debt. 

Having little “overhead” costs (rent, groceries, utilities, etc.) means that if you are working, you can use this time to save up money or pay off debt. It will be much quicker and easier than it will be when you move out and have to start covering those costs yourself. Just because you don’t have those costs right now, doesn’t mean that you should get to spend all that money on other things like a big car payment or other frivolous spending. 

Take the money that you would be spending on rent and put that into a savings account or towards any debt you might have. This will not only put yourself ahead financially, it will also help you build the habit of budgeting for the rent amount every month so it will be much smoother for you when you eventually do move out on your own or consider home ownership.

Build an Emergency Fund (before applying for any credit)

You will be likely eligible for a credit card almost the minute you turn 18 or 19, and while credit can be a useful tool to build credit and manage your money, it can also be a trap for all too many of us. 

One way to determine if you are ready for a credit card, is to look at your savings. If you do not have a sufficient emergency fund set aside and then you get a credit card, the next time your car needs unplanned repairs or some other unforeseen expense, you know exactly what’s going to happen. That expense is going right on your credit card. Now you are in a position where you have a maxed-out credit card, no emergency fund (or the habit of contributing to it), and that is a recipe for financial trouble! Whereas, if you have the habit of contributing to an established emergency fund before you get a credit card, you will be prepared to handle the emergency and not end up in debt.

Although there are many things to avoid financially, there is one key piece of advice that most Millennials and young adults should always keep in mind.

Do not “Lifestyle Chase”

With the internet and social media, we get bombarded with images of our friends, celebrities, and Tiktok influencers sharing their lives with us. Often these pictures and posts are going to include things like shopping hauls, new luxury brand outfits, new cars, apartment and home tours etc. 

It is important to remember that most people are only sharing the good side of their lives, and do not share the bad. What you are not seeing are the high interest car payments, the credit card bills, or the financed furniture in their apartment. Or perhaps that they have financial assistance from their families to help them support their lifestyle. Either way, the important takeaway from this is to remember that everyone is on their own ‘path’ to financial wellness and that you are not required to hit certain milestones by any certain age. You worry about YOU, and you will find that you are in just as good a position, if not better, than many of these people sharing their lives online.

Remember to prioritize your goals and not compare your lifestyle to others. It is much better to be driving an older vehicle that you paid cash for and not have to stress financially, than to be driving a brand-new vehicle every couple of years and be underwater on a high interest car loan. Take things at your own pace and make financial decisions because you want to make them, not because you think you should be ‘keeping up with the Joneses’

Ask for Help when you need it. 

If you find your debts overwhelming and you are struggling to make ends meet, then take the time to ask for help. Often, we can reach out to family or close friends to help us with payments or even just some words of wisdom.  

If this isn’t an option, reach out to us at Allan Marshall & Associates.  We can provide unbiased advice and help guide you towards a better financial path.

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Olivia Harper

Olivia has worked in the insolvency industry since 2016 as an Estate Administrator, after studying Political Science at the University of Victoria. Her passion for helping people with their debt has brought her most recently to New Brunswick, where she services the Moncton, Fredericton and Saint John areas. She is studying to complete the Chartered Insolvency and Restructuring Professional (CIRP) Qualification Program (CQP).