5 money tips for the Millennial
Do you find yourself constantly staring at pictures of your dream home on your mood board? Is the only thing your wallet is good at collecting is dust? If you’re a Millennial looking to get yourself on the path to homeownership, here’s a list of helpful tips to get on the right track.
Ballin’ on a budget
For starters, it’s time to take a serious look at your monthly and weekly spending habits. What are your priorities? What can you cut? Maybe it’s time to unsubscribe from that second streaming TV subscription service or save those Thirsty Thursday nights to once a month.
Living on a budget is easier when you’re not spending everything on your rent. Experts say your rental costs should be lower than 40% of your estimated gross income. Need help figuring this out? Zillow’s Rent Affordability Calculator will make sure you can rent within your means, so you can start saving more money.
Keep a rainy day fund
Living from paycheck to paycheck is a hard life to live. Popularized by Senator Elizabeth Warren in her book, “All Your Worth: The Ultimate Lifetime Money Plan,” the 50/30/20 budget rule might also apply to you. Like the above advice, this rule says to spend 50% of your monthly after-tax income on your needs, 30% on your wants and save the remaining 20% for your first home or an emergency. This might not always be simple, but it’s important to know that your personal saving rate is a huge factor in building financial security.
Build a healthy credit profile
According to a recent BankRate Money Pulse survey, only 1/3 of Millennials own a credit card.* Having a credit card and paying it back in full every month will build your credit score, which will help in making future financial decisions like buying a car, finding car insurance you can afford, renting an apartment, or buying a home. So spend wisely and pay off your card frequently.
Be the boss of your student loans
If you are one of those blessed souls who don’t have to pay student loans, use this time to take a nice, long sip from your morning coffee. If you have them like the rest of us, the best thing you can do is understand your student loans. Don’t shy away from them. Embrace them. Love them. Well, maybe don’t “love” them, but it’s important to know how much you owe, your status and your best options for paying them off.
Commit to your future
The difference between renting and owning is the commitment. Renting is short term commitment whereas owning is an investment. Making this commitment isn’t the easiest decision, but you won’t regret the feeling of accomplishment from your couch in your very first living room. When you’re ready, Guaranteed Rate makes homeownership easy with a variety of mortgage options. Popular mortgage options for Millennials include: a 30-year fixed rate mortgage, FHA loan, jumbo loan and VA loan.
*Cetera, Mike. “Survey: Millennials Continue To Shun Credit Cards.” Bankrate, Bankrate.com, 13 July 2016, www.bankrate.com/finance/consumer-index/money-pulse-0616.aspx.