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How to Stick With Your Budget

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Having a budget is great but not if you can’t stick with it.

Creating limits is one of the first steps in changing your finances for the better. Going through the process of developing a plan can be challenging but is time well spent. However, it’s useless if it is never utilized. If you already created a household budget, it’s time to follow through. These top tips will help you stick with your financial plan.

Dig Deep

Does your budget really suit your current needs? Perhaps it is difficult for you to move forward with your plan because it is not actually right for you. In order to determine this, ask yourself the following:

  • Is it too complicated? Too much content can be overseen. If you created multiple categories for your allocations, it may be too much for what you need. Try condensing if you feel overwhelmed with your objective.
  • Is it too general? “Save money” does not make for a good budget plan. Stating how you are going to do so does. Include details on what you need to do to get started and where you need to make cuts. Action items are a great way to encourage you to proceed. I like to create checklists for myself to keep me on track with all of my goals, including finances.
  • Do you have a backup plan? One reason your household may have a hard time following through with a budget is not having a process for when you actually do cut back on purchases. If you decided to take cable out of the picture do you know what you’re going to do with that money that would have gone to your cable bill? What will you do instead of going out to eat? Knowing this in advance will prevent you from falling back into old ways.
  • Is it realistic? Your budget may not work out if your income goals are too ambitious. If they are based more on fantasy and less on reality, you will have a hard time.
  • Do you have incentives in place? Rewards should go with your budget as a pat on the back for making it happen. These “awards” will be a little (or big) reminder why budgeting is so important (and why you should stick with yours). A vacation, a new outfit or a night out on the town are some examples of ways you can reward yourself.

Make It Fun

Budgeting is not typically enjoyable, but that does not mean you can’t make it entertaining. As previously stated, having a backup plan can keep any holes filled from your cuts, thus preventing abandoning your budget. Some examples include:

  • Turn your living room into a theater. Save money from going out to a play or a movie by creating your own in your very living room. Get the kids involved to put on a play, puppet shows the like. Record them for future nights of fun where you can re-live all the funny moments.
  • Do date night in. Part of the fun of going out to eat with your significant other is getting dolled up, especially if you never get to. But, you can have a night in and still get dolled up. Bring out the fancy plates, put on some nice clothes and cook a new recipe together. You’ll save money and make memories.
  • Create your own entertainment. Build a living room fort and have a picnic in it or plan a night of the week for family game night. You don’t have to always pay for entertainment; it’s often right under your nose in your very own home with the people you love most.

A budget needs to be on-going and monitored in order to work. By checking to make sure it fits you and your needs along with making it amusing, your budgeting process will go a long way. Keep in mind that you can have some flexibility when it comes to your budget as far as periodic adjustments go; just stick with it.

How do you stick with your budget? 

Why Aren’t Millennials Investing?

millennials investing

Why aren’t millennials investing?

Millennials investing seems to be a scarcity in this decade, but it doesn’t mean they shouldn’t. So what’s the problem? Why aren’t we millennials investing more?

I can’t speak for everyone, but I know personally, my top reasons for not investing in earlier years are as follows:

 

  • Lack of funds. When I first graduated college in 2009, I was feeling the recession along with many other freshly graduated college students.
  • Lack of knowledge. I never felt confidently enough to invest. I thought the risk was much too large and that the return would reflect this.
  • Lack of skill. I did not create a steady budget for myself nor did I have any type of savings. My personal finance skills were nonexistent.

Over the years, I’ve educated myself and learned the importance of investing. I’ve also improved my personal finances by taking the time to grow my savings and seek out financial opportunities. But, despite the improvement of the economy over the years, the rate of millennials investing is still low. Why is this?

Various studies show similar reasons as mentioned above as to why the amount of individuals that dedicate time to invest is lower than in previous generations. If parents were not encouraging or enforcing the investing, it seems to have rarely happened on its own. Or rather, it takes longer for it to happen on its own.

We need answers.

While this age group tends to be stereotyped as self-centered and entitled folk who are focused on instant gratification and all things digital, these studies portray a different (and more accurate) light. In addition to simply a lack of investing confidence, Merrill Lynch’s Private Banking and Investment Group’s survey on millennials and money shows that this generation is very careful in making investment choices. They want to be “shown the math.”

We want more control.

Merrill Lynch’s survey also found that trust is a big issue for millennials investing. In fact, 72% of the 153 young Americans surveyed stated that they are “self-directed in their investing.” We’d rather be the ones making the decisions than having an adviser we don’t trust working with our cash. We want to invest with people or resources we personally trust rather than just any certified professional.

We’re more conservative (when it comes to investing).

Millennials, in terms of money, have been compared to post-Great Depression era. We not only watched what happened to our parents in the early 2000’s due to the stock market crash and recession, many of us experienced it ourselves after college. Jobs were harder to come by, and therefore, our focus has shifted. We are just as concerned about our parents and their future as  they are with us. UBS Investment Bank’s 2014 survey confirms this notion. We do our research and are much less willing to take high risks with our money. Although high risk investments do often yield high returns, we are typically holding more than half of our assets in cash, according to the research.

Surprisingly, the results of these surveys show that it is more about being careful and not as much about student debt. We are still feeling the effects of the financial crisis, and this generation needs more education on the topic in order to confidently create a diversified financial portfolio. Millennials tend to have more short-term investments instead of long-term, and we also tend to care more about life experiences than substantial wealth.

The good news is that there are more online tools and resources to help educate and guide millennials on investing. WiseBanyan and Acorns are just a couple of examples of investing sites to get a beginner started. Additionally, if nothing else, young Americans should at least focus on a retirement account as their form of investing, whether it be a workplace 401(k) plan or a Roth IRA.

Knowing the importance of investing is the first step in this process, and it’s one that we need to know we can truly benefit from with the right tools and knowledge.

Are you a millennial who invests? What routes do you take?

 

Money Tips for Millennials

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Millennials and Money

Millennials follow a different path than generations before them, in more ways than one. This group is reaching milestones later in life, such as getting married and starting families, and focusing on life experiences more. We’ve been given all the job advice in the world growing up; the thought that all you need to do is work hard to make it big. However, someone along the way forgot to give more tips on money, especially given the difficulty of finding a job, especially in their field of study, for many millennials.

Although unemployment rates have been decreasing in recent years, millennials still make up roughly 40% of the unemployed in the United States, according to this Newsweek article. This fact can make it difficult for this generation to get ahead, but the good news is there are ways to leverage your finances even if you feel you are working a dead-end job.

Here are four money tips for millennials that I’ve used to help my own finances:

Make saving a social thing. 

I don’t know about you, but I can think of at least five friends off the top of my head who have yet to get that raise at work. While we all love hanging out together, sometimes that involves extra spending that we really should not be doing. But, a way to spend just as much time together without emptying your bank account is to take turns hosting a girls’ night in. Buying some cheap wine and snacks accompanied by some movies and laughter is a great alternative for a night on the town, which can be $81 per night on average.

Also, the crew can ban together to do money-free weekends together. Even if you are not physically hanging out, you can still help to keep one another accountable. Plus, it’s great to have an excuse to bond with friends, especially over common goals.

Create other streams of income. 

If you recognize that you are in a dead-end job, hopefully you are taking steps to get out in order to improve your financial situation. If you are having a difficult time finding a new job (another post for another day), another option would be to create some other sources of revenue as you continue the search.

Seasonal jobs are a great option for millennials as they are often a bit more flexible, but you can also offer to use some skills or talents you currently have to gain some extra income. House cleaning, babysitting and the like are all great ways to make cash fast, but you can also consider freelancing, especially if you want to land that dream job.

Get techy with it. 

Investing seems so unattainable and intimidating before you actually start doing it, not to mention it can also be risky. But, it is a great way to grow your wealth. There are so many online tools you can use now to improve your financial portfolio without the intimidation. These resources cost very little to get started and are great for millennials. The best part is many of them allow you to create your own minimum investment amount, giving you more control over than ever.

Be smart with your options. 

In desperate times, you may be tempted to apply for a payday loan or sign up for another credit card to pay off other expenses; however, by doing so, you are only creating more debt for yourself. These quick options may be easy to get, but they dig your hold even deeper. Don’t get caught up in these fast solutions to solve all your problems; instead develop a strategic and specific plan that will get you out of debt and get you ahead. This plan may include automating a monthly savings amount, consolidating current debt, starting a retirement fund, and cutting back on leisurely spending.

This is another reason why having an emergency savings fund is so important; it will keep you away from wanting to (or needing to) resort to these choices. Avoid accumulating credit card debt and instead work on building your assets and net worth.

 

Millennials definitely have had to face many challenges economically that may not have been expected or predicted by previous generations. By spending some time being careful about your finances, though, you can slowly but surely build a reliable and steady financial future for yourself.

These are just a few ways I’ve focused on improving my finances. What have you done that works for you?