Budgeting strategies for millennials
JOSH MASCARIÑAS
Representing 26.6 percent of the total employment rate in the Philippines, millennials aged 25 to 34 years old are considered the largest number of employed individuals, according to the January 2018 Labor Force Survey.
The demographic shows that millennials dominate the active working population of the country. Are you part of this sector? If yes, you might be experiencing the same financial struggle most millennials are facing.
Having a small salary and not knowing how to budget are one of the many financial problems of millennials. While waiting for a salary increase or working on your savings, here are some budgeting strategies you can try.
50/30/20 system
The 50/30/20 system is a guideline on how to manage your earnings every month. It requires you to spend 50 percent of your salary on basic needs, rent or mortgage, bills, and minimum debt payments.
Of your take home pay, 30 percent can be for wants such as clothing, gym memberships, or gear for whatever hobby you like. It’s nice to acquire these things but you should know that doing so is optional. You can survive without these wants. The 30 percent can also be devoted to savings which is advisable once you start to save up for bigger procurements like a brand new car or house.
The remaining percentage, which is 20 percent, should be allotted to debt repayments and additional savings. Paying off all of your debt is a way to allocate more of your money to your bank account. You should get funds from this percentage when building up an emergency fund.
Cash envelope system
The cash envelope system is a classic budgeting tool that uses cash instead of credit or debit card. It is wildly known to many people across the world because of its effectiveness. It allows people to track their budgets and prevents them from spending too much. This scheme demands you to identify your spending categories in envelopes and put a preferred amount of cash in each of them. Say, for example, you allot P1,000 for groceries every month. Put this amount in an envelope labeled as “groceries” and use it to buy all your supplies.
The cash envelope system is effective for most people as they can track how much is left in the envelope upon purchasing products. This method will teach you how to adjust buying preferences in accordance with the allocated budget inside the envelope.
This budgeting tool may be common but it helps you avoid the dangers of using a credit card for impulse buying.
However, as a millennial, you might find the cash envelope system a “little too old school” for your financial take on budgeting. As a solution, you can go digital.
Digital approach
If you prefer that all of your finances are listed in one Google or Microsoft Excel Sheet, Tiller will take your budgeting strategy to a new level. It is the only app that can securely link your credit card and bank accounts, and extract their details in a digital sheet.
Tiller saves you from the difficulty of manually consolidating and formatting your financial data. It also provides a comprehensive list of possible expenses with the corresponding amount you are required to spend. It generates your whole financial situation according to the details your accounts have.
Aside from the sheet itself, budget templates are also available on Tiller so you won’t need to create one from scratch.
As inflation hit 6.4% last month, the market obliges people to make ends meet. The price of goods continue to increase and your salary is quite far from having an increment. Try these budgeting strategies. They’re created to ease your financial troubles brought by the current economic situation.
Josh Mascariñas is a content writer at MoneyMax.ph. Save money on car insurance, credit cards, and loans when you compare and apply at www.moneymax.ph! Visit our website to know more.
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