How Can Millennials Avoid Bankruptcy?
By FF Newsroom · 1 February 2019
The steady rise of millennials entering into the workforce has been steadily increasing over the years. As a generation that grew up with the initial development of the internet and gadgets, you are considered to be a part of the most educated generations of all time.
You could be getting astute financial advice from well-respected companies like Capstone, however, even with the best financial advice an unstable economy and a fast-paced lifestyle can still adversely affect your financial future if you are not careful.
To avoid falling into financial ruin, here are ways on how millennials like you can avoid bankruptcy:
- Tracking expenses
In order to avoid bankruptcy, you should be able to track your expenses and bills. This includes your groceries, utility bills, insurance pay-offs and personal expenses. Here are some ways how tracking expenses allows millennials to avoid bankruptcy:
- Religiously tracking your expenses allows you to know if you are living within your means or you are spending more than your income
- When you lay out the things you spend for on a daily basis, you can cut down on unnecessary spending especially the ones that take up more than half of your daily wage
- Tracking helps pinpoint wasteful casual spending like daily lunches at quaint bistros, your daily public transportation fee, or random cup of gourmet coffees that can actually build up over time
- Tracking your bills and debts can make you prioritize your spending, and help you in getting rid of your loans faster
While it can be worrying to list down some of the more expensive options in your list, many experts believe that it’s actually untracked spending that can take a toll on your personal finances, eventually leading to bankruptcy. To avoid snowballing on debts, create a list or spreadsheet of your daily, weekly, and monthly spendings. Prioritize your necessities first and limit your treats slowly.
- Limit relying on credit cards and loans
Credit cards are convenient financial devices because they help you pay off some of your expenses which can all be paid later. However, every time you use them for payment beyond your current salary can stunt your credit score and increase your credit card debt over time. Here are some reasons how limitation on credit and loan can help millennials avoid bankruptcy:
- You learn to spend within your means
- You avoid accumulating debts due to unpaid personal loans with compounding interests
- You learn to wait until you have the needed amount
- You will avoid wasteful spending because your cash on hand will limit your expenses
To reduce the impact of affecting your financial standing, avoid using credit cards as much as possible. If you must absolutely need it, then pay with credit cards but only when you’re planning to settle the balance quickly.
- Live within your means
One of the most toxic habits a millennial can get into once they scored a nice paying job is to live beyond their means. This means constantly treating yourself to expensive lunches, vacations, and other forms of personal pleasure that are simply too costly to keep up. For instance, if you are a fan of going out to eat lunches with your friends and shopping for the latest outfit or gadgets then this could be the number 1 cause of your money woes.
With so many temptations, it can be euphoric to live life as a celebrity but unless you make Jennifer Lopez money then it simply isn’t practical. Fortunately, you can still live like a celebrity by making a few life changing habits such as:
- Save your money until your interest starts to work with you
- Aim to save at least 10% of your monthly wage
- Prioritize paying off all of your debts first before making big purchases
- Buy quality items on sale and donate old clothes to charity
- Buy travel tickets during sale periods
- Take advantage of coupons, promos and other money-saving options from your favorite restaurants
One crucial thing to do is to avoid travelling or going on vacation when unnecessary. Not only are you wasting money and getting lower value for your currency in another country, you are also spending time away from work. However, if this kind of lifestyle is well within your means, then you should go ahead and enjoy your hard-earned money.
Conclusion
With these factors in mind, one can expect that it can be hard to recover from financial pitfalls, provided they are disciplined and educated enough. However, with careful evaluation of resources and constant education, millennials can certainly achieve financial stability in the future so long as make some lifestyle changes.