The biggest problem that millennials and members of Generation Z are facing nowadays is the problem of being unable to properly handle their finances. The first major part of this problem is overconfidence. While confidence is not necessarily a flaw, in this particular scenario where about 47 percent of surveyed millennials don’t know enough about finances, this could potentially turn into a major problem. Moreover, this is definitely not a field where you need courage or confidence. All you need are several simple financial mechanics and some basic knowledge of the fundamental financial processes. With that in mind, here are five simple ways to take control of your finances.
1. Set your goals
Taking control over your finances is an arduous task, which is why you might fail unless you’re properly motivated. The first step in doing so lies in defining your goals. This way, you’ll be able to answer the question of what all of this is for. So, make a resolution regarding all the things you want to achieve in the next five years and start doing the budget. We’re talking about life goals like getting married, buying your own home, paying off your student loans, etc. All of the aforementioned are major life decisions, which is why they’ll serve as more than adequate motivators.
2. Track all your spending
As soon as you know where you want to be in the future, you need to set goals that will help you achieve these aspirations. First of all, you need to start tracking all your spending. The easiest and the most reliable way to do this is to download a personal finance app and be quite dedicated to filling in every single dollar that you spend. The majority of these tools can be linked to your credit card and payment gateway accounts, which means that these expenses will be automatically noted down.
3. Be careful of frauds
Another thing you need to understand is the fact that we live in a world of credit card frauds and with more and more people using online payment gateways, things might get even worse. Don’t get us wrong, these payment methods have a myriad of advantages, yet, you definitely need to do something in order to make them more secure. Fortunately, more and more corporations, banks and financial organizations are using advanced information sharing solutions, which greatly benefit their users, making their private information much more secure.
4. Establish an emergency fund
The next priority on your list needs to be a formation of an emergency fund. The majority of financial problems come from unexpected scenarios that you were unprepared for. An unexpected breakdown of an expensive appliance can set you back on your financial path, however, what about a scenario where you lose your current employment. In order to avoid financial difficulties while you’re between jobs, you need to have an emergency fund that can cover at least three months of your living expenses.
5. Pay off your debts
The last thing you need to do is make sure that you’re not paying too many unnecessary debts. High-interest fees can be particularly devastating, especially due to the fact that you have several easy methods of handling this situation. For starters, you could prioritize those loans that have the highest interest rate and pay them off first. Funds for such a thing can come from cutting down on some unnecessary expenses or finding an additional job. Other than this, you might want to try consolidating your loans in order to get a single debt instead of having several of them.
The best thing about the above-listed five financial suggestions is the fact that you can start enacting them as early as today. Of course, you can’t get a consolidation loan in a day but you can at least start making necessary steps to get it quite soon. The reason why this time-efficiency is so important is due to the fact that the sooner you start acting upon these tips, the better results you’ll achieve.