No money in the bank? Here's what you're doing wrong
23 April 2019
A 2019 survey found that 40% of millennials in the US run out of money every other month. These alarming numbers are similar in other western countries, including Australia. Depending on who you listen to what where you read it, most Australian millennials struggle to save money.
Even if you consider yourself generally smart with money, you might still run out of cash before pay day - more often than you want to admit. If that sounds like you, here are some things that might help.
1. You’re not budgeting for your lifestyle expenses
Even to improve their overall financial position - it’s common for millennials to be less willing than other age groups to cut down on their ‘lifestyle spending’. You might have a rough budget that covers rent, bills, food, and transport - but do you factor in daily, weekly or monthly lifestyle expenses? Things like takeaway coffee, going out for meals, concert and festival tickets, friends and family birthdays, beauty treatments, or transport (to name only a few) – all add up. If running out of money before pay day doesn’t sounds appealing, it’s important to consider lifestyle expenses in your budget, too.
An easy way to plan ahead is by working out how much you’ve got for discretionary spending after your bills are paid. Once you have this, break it down to a daily figure. If you don’t spend money one day, add it to your budget for the next day and so on … just don’t go over the mark.
2. You don’t chase money you’re owed
It’s in our culture to buy a drink or meal for a friend as a favour, and they always promise to pay you back but time passes and you both forget. Similarly, many of us lend money to our siblings, partners, children or parents. According to a survey by one payment platform, Aussie Gen Ys lose about $400 a year by lending money they never see again. The problem lies in that 84% also feel really awkward about asking for their money back.
To avoid losing your money, have clear repayment terms in place. Don’t say, “you can pay me back later”. Try asking them how they will get you the money, and when they will be able to pay you back and how they will send you the money. Apps like Splitwise are great for when you go out regularly with the same group of friends. This will help simplify the splitting the bill, and make sure nobody ends up out of pocket.
3. You splurge on holiday
It’s easy to get caught up in the moment when you’re overseas and having a great time. You think to yourself, “I might never be here again – why hold back?!” While it’s important to make the most of and enjoy your holiday, try not to get too far from the habits you have back home.
One bank survey found that only 22% of millennials would skip drinks while overseas in order to stay within their budget. If at home you would normally walk instead of catching a cab, drink less, or eat somewhere cheap on the street instead of a fancy restaurant, then try doing the same thing when you’re on holiday. You may even have a more authentic experience too!
For more information on budgeting and managing your money go to Moneysmart.