Setting goals and planning ahead can help lay the foundation for future wealth as Cec Busby discovers.
There’s a saying, ‘learn to say no by deciding on yes’, and when it comes to planning your future wealth it’s a good adage to live by. Young people are often overwhelmed by all the possibilities and opportunities life has to offer, so much so that saving money for the future can take a back seat to current needs and desires.
Most millennials want a future where wealth is secure and they live the life they choose – but they’re not always clear on how to achieve this dream. Sometimes it may mean they’re too busy living for today to think about tomorrow.
However, the first thing millennials need to recognise is future wealth doesn’t happen by itself. It’s something we accumulate; and it takes nurturing. Deciding how and when and why you spend your money is the first step to understanding what motivates you to save.
Find your Yes
The clearer your idea of the future, the easier it will be to put plans into place for how your will achieve your goals. It’s a good idea to plan both short and long-term goals. Consider them stepping stones on your path to wealth and you will be amazed at how good it feels when you can check them off.
First consider what you want. Maybe you’ve just moved out of home and you love the idea of going for dinner and hanging out in bars with your friends. By the same token you also realise you want to take a trip overseas and see more of the world.
By saying ‘no’ to constant dinner and drinks you will be one step closer to saying ‘yes’ to your overseas trip… Do you see where I’m going with this. Your yes is your real motivator it’s your why… your reason d’etre. If you plan your savings goals around your ‘why’, your ‘yes’, your ‘purpose’, you’ll be pleasantly surprised by how quickly you’re motivated to save.
Check your cashflow
Statistics from NAB show millennials often live from pay check to pay check but if you want to get off the treadmill and change this behaviour you need to understand cash flow. If you want to be able to save for the future you need to know what you’re spending your cash on today. Start by analysing your spending for the week. Identify what is essential and what is a luxury and start whittling away… Do you really need three coffees a day from your work’s local barista or could you bring a to go cup from home for your first cup of coffee each day? Something as simple as this could save you $1000 in a year.
Siphon off some savings
If you, like me, get paid by direct deposit consider setting up an automatic payment to a savings account or approaching your employee about salary sacrificing some of your wage for superannuation. It’s a simple way to save and in the first instance, the automatic nature ensures you are more likely to meet your savings goals and less likely to spend.
Cut back on past and present debt
You’ve got bills and rent to pay and maybe a personal loan or credit cards and this is all before you even think about buying food or having fun. Then there’s all those subscription services not to mention your cable and internet. All these things add up to past and present debt leaving you very little currency to save for the future. One good idea is to do an audit of your subscription services and check what it is your spending on. You may be surprised at the total. In some cases you may have even opted for a free trial and then wound up on a subscription plan because you failed to cancel… The money keeps coming out of your account and you’re no longer using the service. I mean do you really need Amazon music and Apple Music and Spotify… C’mon…
Give yourself some mad money
Purposely allow yourself some money in you wage that is simply, what my grandmother used to call ‘mad money’. That is money with which you can do with whatever you please. If you have money put aside each wage cycle for spontaneous spending you will be more inclined to meet your savings goals in future.
Setting yourself up for financial success is easier when you take baby steps. Even if you just take action by adopting one of the tactics above it will give you some wriggle room to start saving for the future you want in the years ahead.