Put your shopping habits under control
Millennials are known to have a common characteristic of being high spenders. With the mushrooming of shopping malls in most estates and the high adoption of online shopping, young people are finding themselves exposed to the lure of shopping at any given time. Whether in the office working or at home over the weekend, the millennials have the tendency of spending more of their time on different online platforms and more specifically on social media sites.
Advertisers on the other hand are using machine learning and artificial intelligence to target the online community with specific adverts that suit their tastes and preferences. This targeted marketing that has been customized to the individual demand results with higher conversion rates for the marketers; translating to higher spending on shopping by the millennials.
To curb the habit of shopping without planning, you will need to have a budget that guides your shopping every month. This will restrict you from buying things you do not need and help you save more money for spending on other essential activities and for investing too. Having the right credit card from companies such as CreditLoan.com can help you in limiting your expenditure within your target ranges every month; and also reduce your interest expenses on your credit card significantly. You should also consider having a regular monthly deposit of a portion of your income into a fixed deposit account so that your liquidity at any given time is put in check; and it restricts you from overspending since the cash is not available for spending immediately.
Choice between buying and renting a house
If you want to buy a house from your own savings after graduation, it might take you a very long time before you are able to raise enough money to afford the cheapest house in the neighborhood. The natural alternative for those with a deep desire to own their own homes is to take a mortgage loan and finance it over time. For others who do not have the urge to own a house very early in their careers, renting a house is always their go-to option when they leave their parents’ houses. In both cases where you are renting a house or buying one with a mortgage loan, you will have to incur a monthly expense on your house.
The monthly cost of living in your house could be very huge if not well thought out and planned for. As a rule of thumb, your monthly rent payable to your landlord or your monthly mortgage repayments payable to your bank or the mortgage company should never exceed 30%. This upper limit is meant to ensure that you have enough surpluses left for other monthly expenses such as utility bills and your grocery bills.
In an instance where both the monthly rent payable and mortgage loan monthly installments are almost the same, it is advisable to choose the mortgage option since in the long run you will be the ultimate owner of the house. However, mortgage is a less preferred option when both renting and buying a house are almost equally appealing in terms of cost effectiveness. Majority of millennials grew up during the 2008 global financial crisis and having experienced the pain their parents went through when repaying mortgages after the crisis; hence most millennials tend to shy away from buying their own homes using mortgage loans. Nevertheless, whichever option you take should be within your budget and ideally not more than 30% of your monthly income.
In a summary, when you move out of your parents’ house, you will need to face two major monthly expenses that you cannot live without. First you will need to have enough income to cover your monthly shopping and paying your monthly utility bills. Second, you will need to have enough cash to meet your monthly rent or mortgage payments; whichever you choose to go with. Once the two major expenses are covered, you can then move on to saving your surplus income and investing it in other passive investments that grow your wealth overtime with minimal personal interventions from you.