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It’s an exciting time to be a millennial. Millennials — largely born between the early 1980s and early 2000s face many life changes — graduating from college, embarking on their professional careers, getting married, starting families, understanding financial planning, and more. With all of these life changes packed into a short time span, it can be difficult to determine just how to prioritize your financial goals.
Even though individual life circumstances can be vastly different for everyone, every millennial should make a genuine effort to learn about setting up a budget, and even consider budgeting tools that might help them stay on track. Here are three financial strategies every millennial should employ if they’re hoping to achieve financial independence sooner rather than later.
Pay Off Student Loans
Student loans can be a big burden and might even sidetrack you from accomplishing other important life goals. Student loan debt can be crippling and can deter some millennials from pursuing things like marriage, homeownership, and starting a family. This is why it is imperative that you work toward paying off your student loans as quickly as possible.
To pay off your student loans faster, make sure you make more than the required minimum payment every month and that your extra payment amount is being put toward the principal balance of your loans, not toward future months’ payments as a “credit.” By paying off extra principal each month, you’ll not only reduce the length of time you have to pay on your student loans, but you’ll also reduce the amount of interest you pay over the life of your student loans.
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You should also apply all financial windfalls and financial gifts to your student loans. For example, if you get a raise at work, apply the extra money to your student loan payments instead of using it to get a nicer apartment or car, which leads us to the next goal — saving.
Start Saving Now
After graduating from college and landing a career-oriented job, it can be tempting to put all of your new-found money toward fun things like nights out with friends, new clothes, or even a new house. However, the wise thing to do is to start saving money instead. Whether it’s for an emergency fund, or just a general savings account, this extra money can give you a cushion and help lead you toward financial independence.
Saving money may not sound like fun when compared to the lifestyle inflations mentioned previously, but when you can apply saved money toward another life goal, like buying a house, getting married, or starting a family, you’ll be glad you started saving when you did.
Avoid Credit Card Debt
As much as your student loans feel like a burden, they are a lot more practical and manageable than getting into credit card debt. Credit card debt usually comes with very high interest rates, sometimes over 20%, which can make it very difficult to pay off.
It’s ok to use credit cards in a smart way, like to earn rewards for travel or cash back, as long as you pay off your balance in full each month.
Focus on Financial Independence
Ultimately, no matter what your individual life goals are, if you can manage to get out of debt, stay out of debt, and save a little money every month, you’ll be able to work toward your life goals and hopefully reach financial independence sooner rather than later.