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3 Money “Rules” Millennials Must Embrace

As Millennials, we’ve grown up through decade after decade of severe economic turmoil; in fact, we’re officially the unluckiest generation in US history when it comes to the economic odds we’ve had to face. And will continue to face down the line.

Much of that has to do with factors out of our control (recessions, globalization, technological advancements, inflation, etc.).

Still, some of it has to do with the fact that Millennials aren’t given the tools to be financially literate and have been fed outdated money advice that doesn’t apply to the modern world we live in.

However, amidst all of the money confusion, there remain “money rules” that stand the test of time. 

3 Steadfast Financial Rules

Millennials must embrace these rules of thumb to stand a chance against the daunting economic odds stacked against them.

group of professional millennials in conference

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1. You Need to Prioritize your Savings

Before paying bills, rent, dinner—pay yourself first. Set aside a manageable percentage into a wealth accruing vehicle when you get your paycheck each month.

When you view your savings as your “safety net,” it can help put things into perspective.

So many things can go wrong. And if you don’t have a big enough safety net, it can send you into financial ruin.

What if you suddenly lose your job or have a big accident and can’t work?

Or what if you need to become a caretaker to a family member, or lose your partner’s income?

Aside from helping you avoid a potential financial catastrophe, your savings are also what put you a step ahead in life—putting money down to buy a house, comfortably paying off debt and driving you away from taking on more debt, enabling a stress-free retirement, etc.  

According to Forbes, if you’re in your twenties, you should have in your savings account “25% of your overall gross pay. This number may be lower if you’re paying down staggering student loan debt.”

In your 30’s and 40s, that percentage should double; you should shoot for having “four times your yearly pay for people who reach the ripe old age of 40.”

This may seem daunting to some. But saving these large amounts of money doesn’t just happen by taking out money from your paycheck and putting it under your mattress.

There are numerous safe and effective wealth accruing vehicles, i.e., Roth IRA’s, Bonds, CD’s, out there that you can look into today to start saving.

Now, If you’re really at a place where you’re living paycheck to paycheck and saving 25% of your salary would be impossible, then make your savings goal smaller. A good rule of thumb is to strive for a safety net that amounts to at least four months’ worth of rent and utilities.  

2. Credit Cards aren’t Evil

A recent survey found that the one thing scaring Millennials in their daily lives more than death is credit card debt.

We’ve all been scared of credit cards due to horror stories we’ve heard of people going into bankruptcy from hundreds of thousands of dollars they owe on their credit cards.

Obviously, the problem isn’t credit cards: it’s not knowing how to use them. But not only are credit cards not as frightening as you think, but they’re also excellent personal finance tools.

First of all, the number one reason why credit cards are so helpful is the layer of security they put between you and your money (your real money in your checking account). 

While a credit card is linked to the card issuer, if an unauthorized transaction occurs—you’re never responsible for it. And if someone gets ahold of the card’s information online, they have no way of linking it to your bank account.

Using your debit cards for everything will leave your money at a higher risk of theft.

Utilizing your credit card as your primary payment method is also beneficial because of the rewards points you can rack up with certain credit cards. You can then cash out these rewards or use them towards things like travel.

A credit card will also boost your credit score when you use it smartly. Just use your credit card instead of your debit card but pay off your balances in full every month. Then remember to pay on time—as simple as that! 

3. Only Rich People Should Invest Money

This may be something that Millennials are catching up on due to the rise in investing apps and platforms that make investing smaller quantities of money easy and safe. But if you haven’t yet it’s time to get in the game.

Before the Crypto and Robinhood boom, I thought of investing as something a wealthy older man did with millions he had lying around.

However, investing is so broad that numerous opportunities exist for you to use it to grow your wealth in different ways.

Investing money isn’t a one-way road; there are so many avenues you can explore—different accounts, markets, asset types, brokerage firms, apps, and more.

Whether you want a short-term or long-term investment, more risk, less risk, etc., there are ways for anyone and everyone to make a passive income just by doing their research, finding what investments work for them, and figuring out how much they can invest each month.

The Motley Fool has excellent intro resources for those new to investing. And here are some of our favorite apps for beginning investors.

We’ve also got more articles with info on investing if you’re new to it and a course we recommend.

Bottom Line

Millennials may have gotten the short end of the stick (to put it nicely) when it comes to the economy. We have a lot of factors working against us as we work to become financially independent and create wealth for our families.

Still, there are tried and true money rules that we should stick to in order to reach our financial goals. These rules may seem small, but they’ll make a world of difference when put into action.

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