5 money mistakes millennials are making
Want to make 2017 your best year yet? It's possible, and we're not just talking about keeping a gratitude journal by your side and getting your bikini body ready. If you're well into your twenties and still figuring out how adulting works, you're not alone. There are societal pressures to get a job that pays and is equally self-fulfilling, the minutes are counting down on your bucket list and for some of us, that education loan is still hanging above you. Yes, payback's a b*tch — and this is where financial planning comes in.
If you haven't quite made that big step in hiring a personal financial assistant, an app's your best bet. The Co. has recently introduced us to their past tenants, 24-year-old Kenneth Lou and 26-year-old Chew Tee Ming, two millennials (for lack of a better word) who make up a fintech startup. Their baby is Seedly, a mobile financial management app that's less than a year old. Targeting millennials and fresh graduates such as themselves, the app aims to ease users into the daunting world of personal finance, where banks and financial services companies often sell products that might not be entirely beneficial to your needs.
Seedly comes in handy in four ways. Firstly, users can view all bank and credit card accounts in one place, where transactions are automatically categorised into expenses and income. You'll also be able to see reports on monthly cash flow and expenses, and set up a simple budget on how much you're allowed to spend for the month. Security-wise, they've adopted an asymmetric encryption technology and they don't store any credentials. By mid-2017, look out for a more improved platform where Seedly can also give insights on debt, savings, insurance and investments so that you know what you're missing out on. For now, we've picked their brains on the money mistakes you might be making.
1. Not saving 30% of your salary
Those education loans and debts to your parents? Clear them first. "I believe strongly in money management whereby you have to first achieve the basic level of clearing your debts and loans," says Lou, "before getting covered by basic insurance, before saving for a rainy day and finally investments to drive some sort of passive income. Spending comes in a separate bucket, which is a separate matter of needs versus wants."
2. Not using the right lifestyle apps
"This generation's being sold more on the idea that money is pretty hard to earn and therefore should be managed better," laments Lou. "A ton of apps or businesses were born to help people save money, time or a combination of both."
Be savvy. Carousell, Shopback, Skyscanner, Agoda, Airbnb, Uber and Grab — who just announced a private coach service — cut time and money for your travel, transport and shopping needs.
3. Not using your debit or credit card enough
The jury is still out on this one. While some preach that physically holding onto your hard-earned cash will prevent you from making easy purchases with a swipe or click, Lou suggests that cashless payments allow you to automatically track expenses.
4. Not having a financial planner
With Seedly, should millennials do away with a financial planner entirely? Not quite, but just you wait. "In the next 10 years, things in this space will fundamentally change," comments Lou. "The idea of basic financial literacy will be more well understood and thus, the digital online age will truly take more of a stand against the bigger established players with human intervention and sales people who often drive costs higher and inefficiency in the system."
5. Not having envelope budgets
A great way to instill good spending habits starts by dividing your income into categories and assign each category into an envelope. Portion your pay accordingly into "rent", "food and beverage", "transport" and the like. Once an envelope is empty, you can't spend more in that category.