As a millennial myself, I see my generation in 2024 in the middle of our lives. Some would say we are finishing the first third of life, but I think it feels pretty much like the middle. We have already built something, but most of us are not quite done in terms of financial security. Truth be told, student loans, credit card debt, and the pressure to keep up with the latest trends can make financial stability difficult to achieve.
But financial security is not impossible. The question is always: Where do I start taking baby steps? I discussed this question with an artificial intelligence. Here’s my summary of that discussion, supplemented by personal experience.
When your money is gone 24 hours after payday… Create a budget!
Tracking your income and expenses is crucial to understanding where your money is going. Make a budget that accounts for savings, debt repayment, and investments. You can use a budgeting app like Mint or Personal Capital to make it easier.
High interest debt is financial suicide – pay it off!
High-interest debt, such as credit card balances, can hold you back from achieving financial freedom. Focus on eliminating these debts as soon as possible! Consider consolidating debt into lower-interest loans or balance transfer credit cards.
If you have any left over: Build an emergency fund
Life is full of unexpected expenses, from car repairs to medical bills. Having an emergency fund in place can help you avoid going into debt when these expenses arise. Aim to save 3-6 months’ worth of living expenses in a easily accessible savings account. Yup, that’s a lot and you may have to start with baby steps. But just do it!
Start saving for retirement and invest
It’s never too early to start saving for retirement. Take advantage of employer-matched retirement accounts, such as 401(k) or IRA, and contribute at least enough to maximize the match. Consider an RRSP or TFSA.
Investing can seem intimidating, but it’s a crucial step in building wealth. Consider investing in a diversified portfolio of low-cost index funds or ETFs. Avoid putting all your eggs in one basket, and be cautious of high-fee investment products.
Monitor and improve your credit score
A good credit score can help you qualify for lower interest rates on loans and credit cards. Check your credit report regularly and work to improve your score by paying bills on time and keeping credit utilization low. Many banks offer a free service to check your credit score. The BMO, for example, gives you access to it through their regular banking app.
Develop multiple income streams
Diversifying your income sources can help reduce financial risk. This could include starting a side hustle, investing in dividend-paying stocks, or pursuing alternative sources of income, such as freelancing or renting out a spare room on Airbnb.
Practice financial discipline
Avoid lifestyle inflation by prioritizing needs over wants. Be mindful of your spending habits and make conscious financial decisions that align with your long-term goals.
Stay informed and educated
Continuously learn about personal finance, investing, and money management. Stay up-to-date with changes in the economy and financial markets to make informed decisions.
Set long-term goals
Define your financial goals, such as buying a home, starting a business, or achieving financial independence. Create a plan to achieve these goals and track your progress over time.
Financial freedom is within reach – it just takes discipline, patience, and a willingness to learn. Follow this link and learn more about financial maturity!
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