Five things millennials should know about finances

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Finances are a subject that you often don’t learn much about in school, which can leave you very unprepared for the real world. If you can’t manage your money, you’re going to have a tough time in life.

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Five things millennials should know about finances Finances are a subject that you often don’t learn much about in school which can leave you very unprepared for the real world. If you can’t manage your money you’re going to have a tough time in life. Fortunately you don’t need a finance degree to know how to handle your personal finances. Here are the five most important things any Millennial should know about money. 1. You Need to Save Money There are three things that can happen for you financially every month: • You can save money by spending less than you make • You can break even • You can lose money by spending more than you make Successful people are the ones who consistently end up in that first category. As a rule you should try to save at least 10 percent of your income and more is even better. 2. Invest When You Can Afford It The old adage is that you need to make your money work for you and investing is one way that you can do that. While this is a smart decision you shouldn’t start investing before you’re in a stable financial position. That means you have a solid emergency fund built up enough to cover

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at least three months’ worth of expenses. 3. Know When to Spend and When to Save Overspending is a big issue for everyone but especially young adults. It’s tempting to buy that shiny new toy no matter what it may be. Although you need to resist the temptation to overspend it’s also important not to deprive yourself of everything because quality of life matters too. The best choice is to always take at least a day or two to consider any big purchases. This helps you decide if they’re really worth it. 4. Move Out of Your Parents’ House When You’re Financially Ready Moving out is a big step and it’s a crucial part of becoming an adult. At the same time if you can live with your parents rent-free you can save a substantial amount. You’re ready to move out when you’ve built strong financial habits including saving consistently when you have a suitable emergency fund and when you make enough that you won’t need to spend more than 30 percent of your income on rent. 5. Build Your Credit Score without Building Credit Card Debt Credit cards can be a valuable tool or your worst nightmare depending on how you use them. It’s smart to have at least one credit card that you use every month. Not only can you earn either cashback or travel rewards this way but it will improve your credit score. Just make sure you don’t buy anything you’d be unable to afford without the card and pay the statement balance every time to avoid interest charges. You don’t need to buy one of the many Americans stuck in debt or with hardly any savings. Follow the advice above and you’ll be on track for a successful future. Elena Hahn Kiam is an owner and creative director of K-FIVE an e-commerce consumer products platform launching in 2016.

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