Generation Y is unfortunately financially at their most vulnerable simultaneously as the economy is at its most vulnerable. For young 20-somethings and recent college graduates, financial independence is coming at a high price filled with debt, low-paying jobs, and “real world” financial responsibilities.
While it can be overwhelming, it is certainly not insurmountable. Here are five tips to help gen Y take control of their finances:
1. Budget Wisely
For recent college grads, especially those awaiting impending loan payments, budgeting is vital. While college allowed most students free meals, part-time work for a little extra cash to fund fun trips and minor expenses, and no need to worry about the size of their bank account, post-grad life is full of fiscal responsibility.
Learning how to budget by creating a financial plan detailing all debt and expenses will provide recent grads with a solid foundation to begin their journey to financial independence.
When budgeting, be smart about debt. Because of the interest accrued in debt, be sure to pay it off asap, and look into debt forgiveness programs, paying a higher interest loan with a lower interest loan from a company like TitleMax, and negotiating with credit lenders.
2. Accept Help
While gen X began their financial independence in a better economy, gen Y does not have that same luxury. Parental financial assistance is necessary for most young people even if they have a degree.
Because young 20-somethings are not only seeking financial independence but also complete independence, it can be difficult to admit they need help. After living away from home for four years, moving back home to save money, although smart, is not always easy. However, in the long run, accepting financial assistance can lead to financial independence quicker than shouldering all the responsibility.
3. Save And Invest
Instead of having a paycheck come directly to a person, they should look into direct deposit. If possible, have the paycheck automatically split between saving and checking. This forces a person to save money without being tempted to overspend.
In many cases, people intend to save their money, but continually put it off and end up racking up more debt. Saving money in a savings account, cd, or retirement fund will instead rack up good interest that steadily increases the money amount over time.
4. Negotiate A Higher Salary
Even in this economy, employers expect haggling over salary and benefits. In fact, many employers see this as a sign of professionalism, for their new recent-grad hire understands the business world.
5. Set Goals
Setting financial goals allows a certainty to gaining financial independence. If a person does not, then they are simply guessing at their own needs, which could lead to a longer road to independence.
If living at home to save money, make it a priority to pay off student loan debt as soon as possible. And, set a deadline for when it is time to move out. These types of deadlines will force gen Y to gain their footing in the post-grad world and become financially responsible.
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