girl-1733352_640Most millennials aren’t taught personal finance beyond the few who soaked up “lessons” from having an allowance or chores while growing up. However, financial literacy is and always will be vital.

How it’s defined and its best practices evolve as we do. Just like any type of “health,” financial health requires setting a strong foundation, teaching and practice. It’s strange that we have an entire generation in full-fledged adult categories without a clue of how to handle their finances.

Here are six important personal finance tips for millennials:

  1. Credit score management. The importance of credit scores isn’t going anywhere. In fact, they’re more important than ever with some employers using credit scores to narrow down job candidates. Make sure to monitor your credit score, check your credit report regularly for errors, and make your payments on time. This will help ensure you maintain a healthy score. Another effective, but less common way to improve your credit score is by using tradelines where you’re added onto a person’s credit account who already has a solid score. Check out Boost Credit 101 for more info.
  2. Buffering that nest egg. Having at least three months’ worth of living expenses in “liquid cash” that’s easily accessible is a reasonable starting point. Some financial experts recommend one year, but a year’s salary can sound very overwhelming. Start socking away funds in an emergency account by using an app that rounds up purchases and siphons funds to this account so you don’t even notice.
  3. Budget, budget, budget. You know you “should budget,” but what does that mean? Everyone should have an active way to track every penny earned and spent. Whether you do this via an app or website, old-school Excel spreadsheet or another strategy that works for you doesn’t matter. What does matter is ensuring you choose a method you’ll actually use. It’s the best way to see where you can cut costs. If you don’t really know how much you’re spending (or earning!), how are you going to “manage” that money?
  4. Shift your cognitive conditioning. Your cognitive thinking includes thoughts, habits and fluid characteristics that are developed thanks to years of practice—for better or worse. How you think about money dictates how you treat money. It takes conscious effort and changing your bad habits over time to develop new habits. This is a critical step for all parts of daily living, from choosing to buy that daily coffee at the shop or make it at home to how kindly (or not) you speak to yourself. As you budget, consider creative ways to save money and how you’ll change existing habits to nurture new ones. For example, if you know you’ll be really tempted to get that expensive coffee because you drive a certain route every day and will see your favorite shop, change routes. Carve out time in your morning to start a new coffee ritual at home that will make it seem like a treat.
  5. Use the ladder approach for goal setting. It can be very intimidating to set a massive goal (like buying a home) when you’re just learning how to create a working budget. Instead, create a series of steps or mini-goals that will ultimately help you get to your bigger goal. These goals should be attainable on daily, weekly, monthly and quarterly bases. Not only are they bound to be more achievable and offer instant gratification (a trait humans naturally love), but they’ll also keep you motivated to keep working towards the bigger goals.
  6. Utilize the cash method to get started. It’s easier than ever to spend thanks to numerous platforms from bitcoin to sending money to friends and family via PayPal. However, studies have shown many people think of paper cash as more valuable than electronic transfers. If you struggle with overspending, set a cash amount that you’re allowed weekly for extras. Once that money’s gone, it’s gone until the following week. It’s a starter way to learn the value of a dollar and can help keep overspending in check.

It’s never too early (or late) to improve your financial practices. Almost everyone can benefit from a more conscientious approach to personal finance. Determine your biggest challenges first.

For many millennials, this includes poor spending habits, a lack of savings and investments, and not knowing how long-term financial planning works. Retirement and supporting yourself in your golden years is incredibly expensive and challenging. Given the current state of supplementary systems such as Social Security, it’s more important than ever to improve personal finance and money management.


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