“BlogTops” are weekly blog posts that myself, my good friend Fei, and hopefully you will join us in discussing topics that we feel the majority of millennials are dealing with or have dealt with in their lives. To keep it creative we pick one specific word for the weekly topic and then we are letting our imagination and creative writing take our blogs in whatever direction we so choose. It could be anything from generalizing the topic, to specific memories, to something serious, or funny. It’s anything goes! If you want to join along tag your posts with BlogTop on Twitter, WordPress, Tumblr, etc. and we will be sure to promote your blogs on social media!
This weeks blog topic is MONEY. It also features silly notebook doodles. Mature for such a serious topic, I know.Money, finances and expenses are such an important issue and part of life for everyone not just millennials. There’s that saying money can’t buy you happiness which isn’t exactly true in my opinion. When it comes to happiness I tend to turn to psychology and Maslow’s hierarchy of needs to determine what really makes a person happy. An individual who continually is fulfilling their physiological, safety, belonging, esteem and self-actualization needs will be happy. Now while coins and banknotes themselves can’t fulfill these needs they can serve as a means to an end of fulfilling said need. For the millennial just getting out of school a good majority are high in student debt, and not only do we worry about covering current expenses, but also we have to start thinking about future savings, unexpected costs life throws at you all while continually fulfilling our psychological needs. Phew! That’s a lot on our plates. I think that’s really where the importance of money management comes in. A person who manages their money successfully will be able to ‘eat’ everything off their hypothetical plate. It obviously won’t happen over night, but by budgeting, proper investment, and getting on top of all your taxes you’ll be able to pay off your debts, meet your current needs, save for the future and save up for that Hawaiian vacation! Preferably a Hawaiian vacation with all your blogging friends!
Here are some tips to get a start on managing your money!
Record Your Expenses
To start off give yourself this easy to do exercise for a month or two:
Record every time you spend money or use your credit card.
Sometimes when we have a credit card or we use our debit cards for purchases we don’t even realize how much money we are spending on frivolous items. It’s sometimes the smallest but frequent purchases that can surprise you the most too! By writing down everything you buy you can be more aware about your spending habits, and you can allocate purchases more intelligently for the future.
For example, if you find you buy chocolate bars twice a week for $1.50. That’s $3 a week. Multiply that by fifty-two weeks in a year… well, your spending $156 bucks a year just on chocolate bars! Not only could you be using that money elsewhere, but your body will thank you in the long run too! Think about your health!
What about if you go out for lunch or dinner at a restaurant once a week? Let’s say on average the meal is $20 bucks. That’s $1,040 a year eating out. Not only is it so much cheaper to make your own meals at home, it is once again a lot more healthier too. Are you eating out to see friends? What about hosting some pot lucks instead?
Now, I’m not saying you shouldn’t ever buy chocolate bars or go out for lunch, but not going crazy with it and being aware of the money you are spending is always a positive thing.
I’d create a budget using an Excel spreadsheet. It’s perfect to combine it with that expense report you created above. By determining your revenue vs. your fixed expenses, intermitted expenses and variable expenses you can make sure you’ll never be spending more than you earn. I’d then advise you allocate your remaining money in the next three categories…
Having a savings account isn’t anything new, however it’s recommended that you invest about 10% of your income into your savings account. A perfect way to ensure you are hitting this 10% mark, without the hassle of manually depositing money from your chequing accounts is to set up an automated pre-transfer. With my bank I can set it up that a certain portion of my chequing account will automatically transfer to my savings account either monthly, weekly or bi-weekly. Nice when I don’t have to think about saving, it just happens!
Life has unexpected surprises. Not all of them are great ones. A sudden injury, loss of work, natural disasters are all examples of a time where you might have some unexpected costs from your day to day living. Having a separate account especially for a time like this will help remove the stress of being able to pay off these unexpected costs. It’s recommended to have at least three months of revenue in an easy to access account.
Enjoy your money
Probably the biggest advice I can give is to actually enjoy the money you have. It’s completely ok to treat yourself and splurge… as long as you do it responsibly! There’s no point in having all the money in the world if you don’t do anything with it. Money itself can’t buy you happiness, but what you do with it can. Spend it with (and on!) the people you care about, spend it on activities that fulfill your self-actualization, spend it on clothing to raise your esteem. The possibilities are endless, but again do it within budget!