5 Things All Millennials Need To Know About Money

Knowing how to use your money to establish wealth and a good financial future for yourself is very important. Sadly very few millennials think about this or bother to take steps to better their financial situation.
You need to remember that you will not be young forever and you don’t want to start suffering after you are old. To ensure you have a good life after retirement there are things you need to know about money.
Things Millennials Need To Know About Money
1. People Will Be Happy To Spend Your Money
I’m sure you have heard of stories where someone spent their money on friends only for the friends to desert them when it runs out. A perfect example could be of the prodigal son.
Your friends and family members will be all too happy to spend your money if you let them. This is why you need to learn to say no.
There is nothing wrong with treating your friends once in a while but if you do it all the time then you end up hurting your financial growth because you are spending your money while they save theirs.
2. Use Every Savings Method You Can
Saving is a great way to ensure that you better your financial future; you should not spend all the money you earn. Luckily there are various platforms one can use when it comes to saving. You can open a savings account where you keep money you should not use; you can also join a Sacco which will be able to help you borrow money to build your wealth.
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Another method of saving for your future is creating a retirement fund. You should have multiple channels where you save your money in order to ensure you save as much as you can.
Saving only doesn’t ensure financial growth though. You need to invest some of your savings in businesses, stocks or bonds. This is a good way to make the money you save earn you more.
3. Budgeting is important
You probably hate this word but like it or not having a budget is a great way to ensure you are living within your means and can save as much money as possible.
Having a good budget can help get you out of the cycle of living salary to salary. Most people think that living on a budget means letting go of all luxuries and fun activities such as going out, travelling and more.
This is not true because your budget should always include an entertainment fund. What you need to remember when setting an entertainment fund is that it should reflect your earnings. You can’t spend half your salary on entertainment. That is living above your means.
4. There Is A Difference Between Income and Wealth
Most people confuse the two and assume that the more money you earn the wealthier you are. However, this is not actually true. For example, imagine there is someone earning 200K a month but spends all of it and saves little to nothing they can be called rich, another person earns just 80K a month but saves a majority of it.
By the end of the year, the one earning more money will not have anything to show for it but the one earning less will have a few hundred thousand shillings in their account.
This means don’t just strive to be rich but work towards building wealth.
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5. Pay Off Debt Quick
This is another every important aspect of financial growth. Loans gain interest and the longer you take to pay it back the more you have to pay in the long run. Take for example, you have a HELB loan and are currently paying the bare minimum of 1500, by the time you are done paying you would have spent a lot more than if you had decided to pay let’s say 3K.
If you can afford it pay off debts faster .This will mean that you pay very little interest and after you are done you can focus your money on other things.
Another benefit of paying off debts quickly is in case you lose your source of income, you will not have to worry about loan repayments or defaulting.
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In Conclusion,
Because you are young and don’t have as many responsibilities, this is the perfect time to save as much money as you can before your bills increase.
By Michelle Wanjiku