Real World 101:
8 Financial Lessons for Millennials
by 8List
Real World 101:
Life can get a little distracting—before you know it, you’re five, maybe 8 years away from graduation with no financial goals, retirement plans, or even savings. And this happens more often than you think.
But!—before you panic—it’s not too late. Here are the things you must know and do for your future.
8. You can ask for more
A lot of young people, especially those just entering the real world, don’t know that they can actually negotiate their wages. This, and about 80% of those who ask for more actually get some or precisely what they ask for.
If you successfully do this, then you already start your career with a major head start. Negotiating income from your first or early jobs will significantly increase your lifetime career earnings.
For good measure, asking for more money and getting it also means you’ll be able to back it up with talent and commitment.
7. Spend less than you earn
In the sphere of financial management, there exists Barefoot’s 60-20-20 plan.
The plan is basically this: use 60% of your basic pay for necessities (e.g. rent, food, transportation and utilities); 20% goes to your savings account (i.e. a bank account that isn’t your payroll account); and the last 20%, the fun part, goes to your wants (e.g. your travel fund, shopping money, and the other things you can live without but would like to indulge).
If your expenses go beyond these percentages, then you’re mostly likely broke, so stop it. Now.
6. Make smart investments and start as early as possible
The most important of all these lessons, is this—make your money work for you. How do you do that? Saving alone is not enough—you got to make your money grow by investing.
BDO, because they find ways, offers the Easy Investment Plan online (EIP). It’s a scheme that makes reaching your financial goals easier and more convenient by marrying two great financial habits together: saving and investing with the added convenience of doing it online.
With this scheme, you can set the amount of your regular contribution (which can be as low as P1,000) and the schedule (once or twice a month), and you’ll be able to invest in BDO’s Unit Investment Trust Funds. These funds will allow you to access the services of professional fund managers and allow you to invest like a big investor, and more importantly, set up a part of your savings to grow with you.
Pro-Tip 1: From May 1 to July 31, 2016, get 50 BDO Rewards points for a successful single EIP contribution of at least Php 3,000 done online. For more info, click here.
5. Goals are key
After you’ve gotten the pay you deserve and when you’ve started your 60-20-20 plan, then you look at your savings and wealth goals.
This is the fun part, planning where you’re supposed to put all your hard-earned savings—will it be a house, a car, traveling for a long period of time/a long break, the startup of your dreams, all these?
Establish a workable timetable, and follow it. Sounds simple enough, right?
4. Track all your expenses
Set up a track method to track all the money that goes out—keep a record of all the receipts and withdrawal slips.
Doing this will let you measure which areas of your life you’re spending too much or too little money on, foresee potential problems and have the data to avert or resolve them, and see if you can actually up your savings percentage.
Bottom line, keeping track of how you spend your money gives you more control, and an actual, measurable insight on your finances.
3. An emergency fund is ~necessary~
A part of your savings should be kept for events you won’t be able to foresee like hospital bills, car/house repair, natural calamities, political disasters, losing your job, the rise of Cthulhu, the zombie apocalypse—you get the point.
The rule of thumb would be enough money for three to six months’ worth of living expenses, or three to six times the 60% in your 60-20-20 plan.
2. Think about how you want to retire
Early retirement is the dream, right? Imagine traveling around the world in your 40s, without anything to worry about.
You want that? Then establish it as a goal and adjust your plans towards it. Here’s how you calculate.
1. You can work smart to earn more
Side hustles are the way to go but success depends on pro-level skills in time management.
We understand it’s easier said than done, especially if your job has an exclusive/non-compete clause but there are a number of ways to make extra income. It can be from a passion project like making jewelry or home décor to sell, or it can be from passive sources like stocks or an aggregator website with ad spaces.
All you have to do start. Click here and here for some tips.
Pro-Tip 2: when you’re ready to prep for the future, don’t forget to live a little.
Click here for more information on the BDO Rewards EIP online promo. Don’t forget to post your tips and thoughts in the comments!
