4 ways to improve your finances as a Millennial

 

The generational debate has been thriving over the past few years, and no matter which side of the pendulum you swing, it’s clear that Millennials certainly have their costs cut out for them.

Whether you’re trying to save for a gap year, break into the property market, save for tuition/university fees, or manage your car loan repayments, there are many expensive facets of Millennial life.

To manage these costs and to empower yourself as a Millennial, keep the following tips in mind;

• Ask for better deals on your accounts:

Negotiating for better deals on your accounts is a great life-skill to learn and one that could pocket you hundreds (and potentially thousands) of dollars if you put your mind to it. You can apply this skill to just about any account that you have – mobile phone, utilities, home loan, or insurance – so it’s worth giving it a go.

For instance, if you’re disgruntled with your current savings rate, why not ask your existing bank for a better one? If your current bank is offering you 2.5% interest on an initial $1,000 deposit with $200 weekly periodic payments, you’d earn a total of $14,406 in interest. However, if you did a quick online search and found an alternative bank that was offering 3% interest, you’d earn $17,593 interest. This means you’d save $3,187 over 10 years.

It’s a small inconvenience for big savings.

 

• Look up your credit score (and correct your financial behaviour):

Accessing your credit score and credit file is a good initial step to improve your financial behaviour. Your credit score is a numerical representation of how risky you are as a borrower – it’s what a bank or provider uses (among other criteria) when deciding whether they should lend to you.

As a signal of your creditworthiness, your credit score indicates how risky you are as a borrower and it can also highlight any problem areas with your financial behaviour. For example, if you can see a default on your file due to several missed repayments, you may want to reconsider your debt management. In this case, you may decide to lower your credit card limit or contact your provider to create a more manageable repayment plan.

 

• Consider your credit options (but use it responsibly):

If you’re unable to cover expenses, you may need to turn to finance. Personal loans and credit cards can be a good form of finance to help you manage your expenses, as long as you use them responsibly. Additionally, taking out finance can help you develop a repayment history which can be useful when you’re applying for future products such as a mortgage.

When weighing up your options, make sure you review the full spectrum of fees and interest charges involved. For example, if you’re comparing credit cards, review the purchase rate, annual fee, and any cash advance fees that may apply.

On the other hand, if you’re looking to merge existing debt, you may want to sign up for a 0% balance transfer card to reduce your interest costs.

 

• Use apps to budget effectively.

These days there are many online apps and budgeting tools you can use to help you establish a savings plan. Whether you use an online budgeting calculator or an expense management app such as Splitwise or Pocketbook’s Personal Finance Expense Tracker, take advantage of the innovations available to you.

When setting yourself a budget, keep it itemised so you can clearly monitor your outgoings. It’s smart to put aside at least 5-10% of your total savings in a ‘rainy day’ fund so that you don’t get stuck if you’re confronted with an unexpected cost like a medical emergency.

Becoming financially independent can take a while, but as long as you give your finances a detox and think of ways that you can improve your situation, you’ll be on your way to empowering yourself and living life to the fullest.

Author: Bessie Hassan | Money Expert at finder.com.au