Money is the best but it’s also terrible. We all know it – in fact, studies show that more than one-third of millennials are stressed about money.
This comes as a surprise to none of us, since most people in their 20’s and early 30’s are acutely aware of the financial failings we’ve inherited – things like the college debt crisis, costly healthcare options, unaffordable housing, and more.
But as much as money is stressful, it’s also a necessary evil to live – and a required tool to have a good time.
Instead of falling prey to a financial anxiety cycle, combat money stress by understanding your finances and making them work for you. Here are some tips.
Face your finances
Sometimes, as a fully-grown adult, I like to play a game called ‘close your eyes and it can’t get you.’ I play this mostly when I’m trying to fall asleep at night after watching an episode of American Horror Story, but I also sometimes play it with my finances. As you can probably guess, it’s a bad idea.
If you’re someone who plays the avoidance game with your finances, I get it. You’re afraid looking at your accounts will make you anxious, but get this – avoiding your bank accounts will only make you more anxious. Check your accounts a couple times a week at least, even if you’re not spending. This way you’ll never be surprised.
Budget! Make a f@cking budget.
You probably already know this. Maybe you even have a budget set up. But do you follow it? Creating a budget and sticking to it is one of the most valuable financial strategies there is. It requires understanding your finances and exercising self-discipline, since gone are the days when you were responsibility-free. Even if you don’t have a family or a mortgage, it’s likely you still have monthly expenses: a car payment, rent, a phone bill, groceries.
When making a budget, first understand your spending by looking at past spending behavior. Set hard amounts for recurring bills, then calculate how much you spend on ‘fun’ things – eating out, bottles of Woodbridge, a thousand destination bachelorette parties for your bougie friends.
Pro Tip: Check in with your budget regularly and see what you’re using and not using. If you find that you barely touch Hulu since Netflix is your daddy, consider canceling Hulu and saving that $120 a year.
Track your spending.
Alright, so you’re no longer scared of checking your banking app and you’ve got the budget set up. Now it’s time for the ongoing part: tracking your spending.
You don’t have to take it to the extremist level and consult an Excel sheet several times a day, but do make notes of what you spend and where. Most banking apps make this convenient by listing your purchases, but if you use cash or checks, keep a separate list somewhere easily accessible. And, if you have a joint bank account, keeping track of your own spending habits is a good way to solve the age-old question: ‘where’s all the money going, honey?’
Give yourself an allowance – and stick to it.
Budgeting doesn’t have to be all work and no play. If you earn money, you’re entitled to spend it how you want, and most of us want to spend it on things we want or experiences we love.
To keep from overspending or depriving yourself, budget an allowance for yourself. This is money designated for only fun things and shouldn’t include necessities like clothes and groceries. Instead, use this to grab that splurgey handbag you’ve been wanting, or save up to spend several months’ of allowance on a luxury trip to Europe.
See? Managing money can be FUN!
Here’s another line item for your budget: savings.
Life is irritatingly unpredictable, and the best way to avoid money-related anxiety and unexpected debt is by saving. There are several different kinds of saving, from long-term savings to liquid savings, so look into which money management options are right for you.
If you’re able, consider investing; millennials invest less than any other generation, though it’s still a decent way to turn a profit if you do it right. Express an interest in investing at your bank or with a local money manager and they can point you in the right direction.
Always have a cushion.
This is advice my mom gave me when I was a teenager: ‘always have a cushion.’ You should always have some money saved up and sitting, untouched, just in case you have an emergency. This money is to be saved up and then ‘forgotten about’ – you should move it to a separate savings account and ignore it, meaning you don’t pull from it for recreational fun, ever.
Instead, this is the liquid cash you have on hand in case you need a surprise new set of tires; unexpected dental work; surgery for your sweet puppy; or a bail money.
When I started my cushion, I was 18 and I always made sure I had $1,000 dollars sitting untouched in my bank account. Now, at 26 with two kids, the rule of thumb is ‘three months’ salary’ – this way, if for someone reason you’re suddenly without income, you have 3 months covered before you have to start panicking.
Don’t get discouraged.
Money is terrifying and awful and stressful and wonderful, and you’ll never escape its reach. But establishing good habits now – when we’re still young and bright-eyed and full of zest and dreams – is a great way to cut down on anxiety, both present and future, and set yourself up for a successful, secure life. … With plenty of money left over for adventures.
image courtesy of katie