5 money tips for the Millennial
Do you find yourself asking “what should I do with my money?” If you’re a young adult looking to be a pro with your finances, this article is for you. By managing your money the right way, you’ll be on the awesome path to homeownership.
Millennials, you work hard but also want your work to matter. We get it. These tips will help you maximize your time and money.
Ballin’ on a budget
For starters, seriously look at your finances. Understand where your money should be going. When renting, your rental should be 40% of you estimated gross income (or lower!). Zillow’s Rent Affordability Calculator can help with this. By living within your means, you can start saving money.
When in doubt, have a rainy day fund
Don’t live paycheck to paycheck. According to the 50/30/20 rule, you should save 20 percent of your income. As that might not always be so simple, it’s important to know that your personal saving rate is a huge factor in building financial security. The app Digit (https://digit.co/) helps you save money, without even thinking about it. Check it out!
Build a healthy credit profile. With a Credit Card.
It’s important to understand the benefits of having a credit card. 67% of Millennials don’t have credit cards and a third of Millennials have credit scores too low to qualify for most mortgages according to financial website, NerdWallet. Having a credit card and paying it back in full every month will build your credit profile 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. The main point is your credit score will affect how you can borrow in the future.
Be the boss. Of your student loans.
If you are a blessed soul to not have student loans skip over this paragraph. If you have them, the best thing you could do is understand your student loans. Do not shy away from them. It’s important to know how much you owe, your repayment status, and your best option for repayment and forgiveness. About 36% of Guaranteed Rate Millennial homebuyers in 2016 carried student debt. There are different mortgage loan programs available for first time homebuyers with student loans who may be concerned about this being a road block.
Put it in your name.
The difference between renting and owning is the commitment. Renting is short term commitment whereas owning is an investment. Popular mortgages for Millennials include: 30 Years Fixed Rate Mortgage, FHA Loan, Jumbo Loan, VA Loan. Learn more about the buying habits of Millennials, here.