12 Financial Tips All Millennials Should Bookmark Immediately

No matter how much money you earn or have saved, here's how you can make the most of what you're working with.

If the idea of creating a budget, investing your money wisely, and paying your bills on time is an exhausting one (wait...I’m supposed to be doing all three at once?!), you’re not alone — especially if you’re a millennial without a ton of expendable income who’s slowly chipping away at student-loan debt.

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And if you’re a woman, there’s the added element of the income gap and, consequently, student loan gap.

But with some careful planning, thinking about your finances doesn’t have to be nightmare-inducing. Here’s what you can do right now to make the most of the cash you’re working with.

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1. If you have to choose, tackle credit card debt before student loans.

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Focus on paying off your credit cards first, because that interest tends to be the higher yield, says Sallie Krawcheck, CEO and cofounder of Ellevest, a digital financial advisor for women. She suggests also focusing on any loan debt yielding over 6% to 7%, whether that’s student loans, car loans, or any other expensive debt.

2. Try to make the 50-30-20 rule your goal.

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Krawcheck advises putting 50% of your take-home pay toward needs (bills, groceries, housing, transportation, etc.); 30% toward “wants” (aka the things that add joy to your life, like fun trips or happy hours with friends); and 20% toward “future you,” meaning savings, investments, and debt payments above minimums.

This may not always be possible, of course — life is expensive! — so if your needs currently exceed 50% of your take-home pay, think about the steps you might want to take or expenses you may be able to reduce in order to make this a more attainable plan.

3. Start investing your money right now — even if you can only invest a few dollars a week.

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“A dollar in your twenties is worth more than a dollar in your thirties, forties, or fifties,” Krawcheck says, thanks to the power of compounding. As a BuzzFeed News article explains: “As long as the market rises, investment gains compound. In 10 years, an investment of $100 that grows at 4% annually will be worth $148; $1,000 becomes $1,480; $10,000 becomes $14,802, and so on.” No amount is too little or too much — just start investing with whatever you can, whether that’s through your employer’s 401(k) or otherwise.

4. About that 401(k): Use it! And determine how much to contribute based on how much your company matches.

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Though retirement might seem ages away, as soon as you have the opportunity to invest in a 401(k), do it, regardless of how much money you’re making. “There are two powerful wealth builders in a 401(k),” Krawchek says. First off, its tax benefits; your money can build in a tax-deferred way. “The second is, if your company has a match, that is free money … if you put in 10, and they put in 10, you have a 100% return immediately. And then the value grows off of double what you can afford to put in.” If your company matches half of what you put in, you get a 50% return, and so forth.

A good rule of thumb, advises Krawcheck, is putting 10% into your 401(k), and then, aligning with the 50-30-20 rule, putting that other 10% for “future you” into savings or investments. And as you get older, you might want to consider switching those percentages around and investing more in your 401(k) and putting less in your savings — after, for instance, you’ve already bought the property you were saving up for all those years.

5. Aim to save at least three months’ worth of take-home pay in an emergency fund — a savings account stored in the bank.

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You may be wondering if “savings account” and the oft-referenced “emergency fund” are interchangeable terms, and they are indeed. Earlier in your career, Krawcheck says, you should aim to save at least three months’ of your take-home pay; as responsibilities and obligations accrue, six months’ of pay is ideal as you move further upward in your career.

And pack it away in a bank account. “A lot of folks ask, 'Should I take it out of the bank and invest it in something that has a higher yield on it, like a money market fund?'” she says. “The challenge with that is you do get small increments of additional return typically. In a terrible market, which happily we typically only have with years and years of spacing between them, you might not get all your money back — whereas with a bank, even if it goes bankrupt, it’s government-insured. That is truly safe money.”

6. Look for credit cards with the lowest interest rates.

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Cards that promise bonus points for travel and other perks can be enticing, but a low interest rate is the most crucial factor if you aren’t the rare unicorn paying off your credit cards in full every single month. “If you have to hold credit card debt, there’s a big difference between a 10% cost and a 20% or higher cost,” Krawcheck says. “In so many cases, even with a 10% interest rate, you wait to pay something off long enough and you’re paying interest on interest now. You’re paying for the benefit of borrowing years ago and that’s what’s so heartbreaking.” That said, she advises reminding yourself, “If I can’t afford to buy it without using my credit card, then I can’t afford to buy it.”

7. If your credit score isn’t nearly where you want it to be, don’t panic.

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First off, you can (and should!) regularly check your credit score for free on a site like Credit Karma. Monitoring your own credit is what’s called a “soft” check — it won’t affect your score, unlike a “hard check” (i.e., when a potential lender reviews your credit for a loan, mortgage, or credit card).

While a “good” credit score is generally considered to be 700-749 and an “excellent” one 750+, if that range seems miles away, just take a deep breath and do what you can. “Don’t cry over spilled milk,” Krawcheck says. “If you’re there, you’re there, so just pay your debt on time, work down that credit card debt to the best of your ability, pay those student loans, and just one foot in front of the other and don’t make the same mistakes again. Just because you made them in your twenties doesn’t mean you have to make them in your thirties — even if your twenties were more fun!”

8. Embrace talking about your income with friends.

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What’s the best way to broach the subject? “Wine,” Krawcheck jokes. But really! You might find that bringing up the subject of jobs and income out of the blue can be a little challenging — Krawcheck points to research findings that women would rather talk about their own death(!) than about money — so she suggests coordinating a career-chat night with friends. Bring a bottle of vino and plan to discuss things like how you all ask for raises, how you landed your jobs, how much you make, and how much you made when you started out.

These conversations are crucial to gaining a better sense of your value as a professional — and knowing, for instance, how much you might want to ask for when you talk to your manager about a raise or promotion. It may also help mitigate any sort of feelings of embarrassment or shame around money.

9. If you and your partner live together and one makes significantly more income than the other, try to approach a system that's fair.

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Chances are, there’s going to be some disparity between your salaries, so you might want to consider contributing to rent and bills on a prorated basis, or a percentage of what you each make: meaning if you make $40K and they make $80K, you might put in $500 while your partner puts in $1,000. "There can still be a fundamental unfairness about that but it’s closer to equal,” Krawcheck says.

That said, communication is key, and you’ll have to discuss what approach works best for your situation — whether that means each putting a particular percentage of your respective income toward rent or bills or one person being responsible for a specific expense each month.

10. Speaking of buying property: If you’re thinking about taking the plunge, make sure you have enough for a 20% down payment. And be prepared to turn down some happy hours!

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“Do not be lured in by the 5%, because that’s debt that you will owe if things go sideways,” says Krawcheck. “If you put down 5% and have a mortgage for the 95%, all that has to happen for you to have no equity in your home — for you to lose all of it — is for the real estate market to go down 5%. That happens with regularity.” With at least a 20% down payment, the idea is you’ll have some cushioning to prevent being hit hard by up-and-down markets.

Also, if buying a home is an important goal for you, be prepared for the sacrifices you might have to make once you do; for instance, you may not be able to afford going out with friends as often or ordering takeout every night. So plan accordingly: Maybe you replace dinner and drinks with friends with a potluck and game night at your place, or start meal-prepping on weekends so you’re not spending as much on food during the workweek.

11. If you’re a new parent, consider investing in a 529 plan.

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A 529 plan is essentially an education savings plan (sponsored by a state, state agency, or educational institution) that offers tax benefits and can help you be more financially prepared for your children’s future. Simply invest what you can afford to. Because of the power of compounding, Krawcheck says, she herself was able to get her kids through college by just setting it up when they were born — she didn’t even make regular contributions to it.

12. If you're having trouble getting started, try apps designed to help you stick to a budget so you can more easily track and meet your goals.

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Apps like Savings 2, which uses color-coding to track your spending, or My Weekly Budget, which helps you set a budget for the coming week and log what you spend, can help you approach budgeting in an organized way if the idea of tackling it on your own seems overwhelming. You can also find more of the best money-saving apps — including rewards-based ones like Drop and Ibotta, which give you cash back or points to redeem on the purchases you’re already making — here.

Now go forth with your newfound financial wisdom and prosper. You've got this!

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