One of the challenges facing millennials currently is getting their lives sorted and with that, their finances as well.
But getting your finances sorted may not be the most exciting thing on your agenda at the moment. It’s stressful, may give you a headache and worst of all, it involves numbers. Numbers!
Here are three steps to getting your financial life organized!
1. Save up!
It’s never too early to start saving up. I know for millennials, the idea of setting aside money for future purposes may seem like an outlandish thing to do. I remember when I was still a student – many of my fellow students were not even thinking of saving up yet. Many were piling up student loans instead! My advice is it is never too early nor too pre-cautious to start saving up. Have that road trip planned across North America next year or how about that Eames chair you’ve been pining over for ages? Open a savings account and start putting away money every month.
As a rule-of-thumb, apply the 50/30/20 rule – allocate fifty percent of your income toward necessities (housing, living bills), thirty percent to wants (clothing, vacations, restaurants) and twenty percent to financial goals.
2. keep track of your (future) expenses
We’ve all had those months where we’ve overspent our budgets. Perhaps you had a lot of birthdays in one month or you’ve just made a huge investment. It’s alright, as long as you’re not overspending every month.
To get to an organized financial life, you’ll have to make an overview of your current and future financial status. Make a balance of your monthly income and costs and keep track of your spendings. If you have an ING bank account, there’s a feature in the ING mobile app that assesses your current financial status for you as well as your future status. The ‘Kijk Vooruit‘ tool lets you keep track of your future expenses by taking an estimate of your monthly income and costs based on previous spendings. This way you’ll always know ahead what your expenses are going to be in the future (which can come in handy with the holidays).
3. set a monthly budget
The key to a good financial life is knowing how much you can spend every month. Applying the 50/30/20 rule (see above), you can spend up to thirty percent of your income on all things other than necessities and savings. It sounds easier than it is – just try to stick the the budget every month and allow yourself to overspend only in cases of emergency.
That is it – three simple steps to organize your finances! I hope this will get you guys ready for the new year. Good luck!