Financial management for millennials

2024 Author: Malcolm Clapton | [email protected]. Last modified: 2023-12-17 03:44

Carelessness about finances turns into debt and paycheck-to-paycheck survival. How to improve your financial situation and gain a sense of security with the help of modern web services, read in this post.

Young people in their 20s and 30s are often reckless about finances. We earn our living, spend on our needs, entertainment and hobbies, but we don't even think about rational spending of money, about our budget or about the possibility of investing.

It really doesn't matter how much you make, because investing and budgeting is a different attitude to money, and quantity has nothing to do with it.

This post is about how to manage your finances if you receive a stable salary and rarely have income on the side.

Below you will find a description of a strategy that works great even with very modest salaries, as well as several tools to help you manage your finances more conveniently.

Step 1. Create an account in the program for accounting finance

In the United States, everyone is obsessed with a convenient service in which you can track all your financial transactions.

When registering, the user enters bank card details, after which he can use the service to monitor all his income and expenses, plan a budget, receive advice on cost optimization and notifications about excess interest on loans.

There are no similar services in our country yet. Of course, unlike Americans, Russian consumers are not so willing to use credit cards, and in many outlets it is still impossible to pay with a bank card.

Despite this, there are several convenient services with mobile applications in which you can manage your budget, record and plan all expenses and receive notifications about planned payments. I found several free Russian services for financial accounting or, in other words, home bookkeeping.

A service that immediately attracts attention due to its cool name. It has a very simple interface without any additional elements and simple accounting. That, however, does not negate the ability to download transactions of some banks like Alfa-Bank, VTB 24 and others.

It has built-in analytics and reports: a map of income and expenses, comparison of periods for debt and cash. All this in the form of convenient tables and graphs. There are also opportunities for setting financial goals, everything is quite convenient and simple.

The mobile version is synchronized with the web service and includes the possibility of joint family accounting, recognizes SMS from banks and automatically enters them into income and expenses.

Immediately after registration, you fill out a short questionnaire, the data from which will be useful for creating a list of categories and basic recommendations. There you are immediately informed about the "safety cushion", which it is desirable to accumulate in the near future.

You can synchronize your account with bank cards of some Russian banks, including Sberbank, VTB and others, and upload transactions directly.

In addition, there are indicators of financial condition, according to which the program will automatically give you tips about managing your finances.

This service is VERY simple. There are no great analytical capabilities (there is an analysis of the annual cash flow) and synchronization with banks, but you do not need to understand anything at all. The service gives you an initial briefing, you enter your first transactions, and voila!

Create a budget, set goals for savings (there are already ready-made goals like a vacation or a "safety cushion", one click - a goal has been added), add income and expenses.

There are all the same income, expenses and transfers between accounts. Categories of income and expenses are added in a separate section "Directories", and not directly during the entry of transactions. But there are templates for frequently recurring costs, which is quite convenient.

For budget planning and financial goals, large or medium, you need a premium account. However, there is such an account in any of the above programs, and without it you will get a minimum of opportunities.

The good news is that any of these web services have mobile apps for iOS and Android, since it is much easier to enter your expenses from a mobile device.

Step 2. Create a budget

The first thing to do after creating your account is to plan your budget. If you work officially, you probably receive a salary twice a month and all taxes have already been deducted from it. So just enter the amount of your salary.

Then add to your budget any recurring expenses for the month, such as rent, travel, internet, and so on. This can be loan debts, childcare, the amount that you must pay to elderly parents and other expenses that are clearly repeated from month to month.

Now you can see a graph of your budget: how much you plan to spend on different categories, how much you have already spent and how much you can spend more without getting out of budget.

You can create a separate category "Everything else" or "Just in case." This is where money will be stored that you did not plan to spend according to your budget. This will give you a more accurate idea of how much money you have available for contingencies.

Step 3. We take into account debts

With budget planning, it is much more convenient to use credit cards for that lack of money, when you have already spent your last salary, and the advance has not yet arrived, but will soon be.

The program prescribes how much money you owe and until what date you have to pay. This way you will not forget to pay and you will not have to pay interest.

Easy Finance uses a special feature for this - automatic entry of payment dates into Google Calendar, as well as reminders by email and SMS.

Zen-mani also has such an opportunity, albeit without Google Calendar. You can schedule recurring transactions and receive email reminders in advance.

Step 4. Set goals for savings

So, you make a budget, and your expenses for the month remain within that budget. Great, it's time to think about saving. You can configure the service you use so that every month a certain amount is transferred as savings to your account.

A great savings goal is emergency counting. Such an account will provide you with what money should provide - security.

It is up to you to decide how large your savings will be, but most often it is recommended to postpone the amount, which in the event of an emergency will be enough for six months of life without work. If you've been doing home bookkeeping for a few months now, it's easy enough: take your average actual budget for the month and multiply that by six.

When this amount accumulates, do not touch it until the onset of the most extreme case, such as that you will be left without work, car or housing. You will see that with a reserve of money "just in case" you will feel much more comfortable, calmer and more confident.

You will be able to set other goals for the accumulation. It can be different purchases, large or not so, "vacation fund" with savings for the coming vacation, or something else.

By calculating a budget, you will be able to clearly understand how much money you can set aside for an item, event, or vacation each month.

For example, you see that every month you have 5,000 rubles in excess of your budget and regular expenses. You can set a goal for yourself, for example, “buy a new smartphone,” and the program will calculate how much you need to save each month in order to accumulate the required amount, say, by the end of summer. As a result, you get peace of mind and transparency in your personal finances.