Born in the 80’s to early 90’s, generation Y kids are the ones who grew up watching internet, mobile phones and social media taking over the world. It is without a doubt that some might perceive Gen Y kids as the pampered and privileged generation as compared to the other generations. Gen Y kids are given much more freedom to choose and opportunities to seize. Gen Y kids are known for their uniqueness and modern mindsets to do things differently from the generations before them, such as the Baby Boomers (late 40’s – 60’s) who believed in hard work just to put food on the table. Then there’s the Generation X (late 60’s to 80’s), who tried to move slightly away from their predecessors and insisted on living a balanced life of work and play.
But when Gen Y’s came along, these kids were caught in between the two generations of vast differences, leading the Gen Y’s to do things their way and making their rules. The good thing about this sense of independence is that there are kids who turned out to be movers and shakers of the world. The not-so-good-thing is that, the consequences of being caught in between two extreme ends has caused some Gen Y kids to be too comfortable in their zone and living beyond their means.
According to statistics, the largest pool of consumers with the highest spending power are the ones aged between 20 – 30 years old. Adding on to it would be the amount of credit card debts, personal loans and education loans that most Gen Y’s are struggling to pay off. More and more Gen Y’s are having trouble coping with this financial insecurity, however despite how bad the economy is, there are ways to deal with it.
Operation Freedom: Make a List of Your Debts or Monthly Commitments
With the many things we have going on in our lives, sometimes we might oversee how important it is to keep track of our loans. Think of it as you are starting from scratch and make a list of your debts. Don’t forget to include your monthly commitments, like your phone or internet bill, even if it is an estimated amount. By listing it out, you will be able to see how much you are spending every month.
Do Your Monthly Accounts, And Don’t Worry, We Have Apps!
As a Gen Y kid myself, most of my peers were quite surprised to know that I have a datum where I keep track of my monthly expenses the moment my salary comes in. Doing your monthly accounts goes a long way. It is more than just monitoring what comes in and out, but helps you tackle the important payment first such as your house rent or loan, followed by your utilities and then your loans and credit card debts. By doing this, you get to avoid overspending on unnecessary spending, but you also get to see if you can make room for other things like buying a vacuum cleaner or signing up for a gym membership.
Don’t worry about having to write this stuff down, we’re gen Y! Use apps like Wave, GoodBudget, Mvelopes, Pocket Expense (our favourite) and Expensify. And some will even sync your bank accounts, easy!
Face Reality: Tackle Your Debts First
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Tackling your debts first is just as important as putting aside money for savings. When it comes to your monthly expenses, the rule of thumb is to always make sure that you clear of all your debts and commitments first before even thinking about splurging on something else. Plus, the sooner you clear off your debts, the sooner you get to live a debt-free life. If you are struggling with credit card payment, there is an online credit card calculator that you can use. This way, you will be able to fix your own fixed payment to avoid interest. Paying interest is a killer, it’s just wasted money! The best part of clearing off all your debts is that you finally get to shift all that money into your savings account instead. That’s a lot of cash!
Good News, You Still Can Shop! Set A Monthly Spending Fund for Splurging
Just because you are focusing on your monthly commitments doesn’t mean you don’t get to enjoy a little pampering or two. Every month, once you are done paying off your commitments, set aside another fund just for spending. You can create categories such as clothes & shoes, entertainment, travel, hair & beauty, etc. With the amount that you are left with, you can decide how much you want to include in each category and not end up over spending or using your savings account.
Develop a Plan and Save Habit
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It is not too late to start planning where and how you want to invest your money, especially if you have some extra money coming in. There are several ways to invest your money such as Public Mutual Fund or Fixed Deposit. Otherwise, you can look into insurance savings plan, another way to save your money besides just setting aside extra cash for rainy day.
If You’re Really Bad At This: Attend a Counseling Session
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Finally, If you find yourself unable to cope with the debts and loans, try attending a counseling session at Malaysia’s Agensi Kaunseling Dan Pengurusan Kredit (AKPK) where you will be given advise on how to manage your payments. Signing up with a debt management programme will help you develop a sense of control over your life and debts, and most importantly to avoid bankruptcy.
Managing your monthly expenses can be pretty stressful, but it isn’t so bad once you know how to deal with financial insecurity. Learning how to manage your finances will eventually make you financially wiser. After all, this habit goes a long way and will come in handy once you are ready to purchase your first property or start a family.