How to balance multiple money goals: A guide for millennials
Millennials can be easily overwhelmed by all the choices available to them in regards to spending their money. They have student debts that need to be paid, savings they need to build, and retirement goals that need to be planned. Once millennials enter the workforce full time, people need to ensure they are making the most of their money. So, what can millennials do with their money while they are balancing multiple money goals?
SHOULD YOU HAVE MORE THAN ONE MONEY GOAL?
The answer to this question really depends on each individual’s financial situation. But, generally yes you should. It is possible to have debts, whether they be credit card debts, student fees, etc., and still save for a holiday, or your first property.
PRIORITISING YOUR GOALS
In order to tackle your money goals, you should first divide and prioritise them, and in order to do this, the first step is separating them into short term and long term goals. In money terms, short term goals can last for three years or less. These goals may include holidays, emergency savings, etc. Long term goals are purchases such as a home, or saving for your retirement. Once you prioritise your goals in what is most important for you, you will be able to set a budget accordingly, and allocate money towards these goals based on what you can realistically afford.
HOW MUCH MONEY DO YOU NEED?
The more money you have to allocate towards your goals, the quicker you will be able to achieve them. This however, is completely dependent on how much money you make, and how much you spend. Ideally, putting 20% of your earnings aside for your goals is recommended. If you are someone who doesn’t budget very well, or you never had before, 50/30/20 is a good starting point. What this means is that 50% of your income should go to fixed expenses you may have, 30% to variable expenses, and the remaining 20% should go towards your money goals, or towards paying off debts. If you already currently maintain your own budget, or can afford more than 20%, you should do so.
WHAT IF YOU DON’T HAVE ENOUGH MONEY?
If you can’t afford to save enough to meet your goals, there are two options available to you. The first is to make more money, and the second is to cut your spending. To make more money, there are countless options available for you. If you are looking for some short term cash, sell some possessions you don’t use anymore. If you need something longer term, ask for a raise at work, start freelance work, or find a part time job. If these aren’t your cup or tea, cuts can be made to your spending.