Whether you’re trying to save to buy your first home or you’re simply struggling to pay the bills each month, times can be hard when it comes to finances. A lot of millennials in the UK aren’t where they want to be financially, which is why a good knowledge of financial planning can be imperative to reach your goals and live more comfortably. To help you out along the way, here are a few financial planning tips for millennials to follow.
Creating and sticking to a budget is one of the best things you can do to really get to grips with your finances. There are lots of ways to do this, with the most popular option being a budgeting spreadsheet to update throughout the month. There are a lot of free budgeting spreadsheet templates for you to use which allow you to properly keep track of what you’re spending your money on and help avoid any nasty surprises at the end of the month.
You may have heard of the 50/30/20 rule for budgeting your money. This method can be a really effective way to work out what percentage of your income you should be spending on each different expense. The rule suggests that 50 per cent of your income should be spent on your ‘needs’ which means things like rent, food, transport and household bills. Then, 30 per cent of your income is left for ‘wants’ including luxuries and bills like your phone bill. After that, 20 per cent of your monthly income should be put into a savings account. It can be hard cutting out luxuries like that morning coffee or a new pair of shoes, but this method can help you realise that there is room to save money whilst still treating yourself. If you earn around £1,200 a month, for instance, that means you’re still left with around £360 to spend on your ‘wants’, which is more than enough for the occasional meal out or Friday night takeaway.
Investing may be a somewhat foreign concept, especially if you’re struggling to stay on top of your finances as it is. While a lot of investments may seem out of reach for millennials, your younger years are actually the best time to start thinking about ways to invest your money. Micro-investing is one route that many millennials are beginning to take, with the help of apps like MoneyBox which make investing into stocks and shares easier than ever. While this type of investment method can be simple and appear less risky than others, it isn’t always the most lucrative option.
Those looking to really grow their finances and gain more financial freedom should look at investment methods that can offer a higher return on investment, such as property investment. Buy to let investment, particularly in UK cities with a good track record for strong rental returns, can be a great way to increase your income and help save for a more secure financial future. If you do decide to invest in property, consider whether you’ll need a buy to let mortgage to help you with the investment, look at the best places to invest in like Liverpool and Manchester, and choose a good property company like rw-invest.com to ensure everything runs smoothly.
*This is a guest post