Millennials are often coined as being wasteful with their money, spending it on the ‘here and now’
rather than budgeting, saving, and planning for retirement and unexpected financial burdens. While
many do not fall under this stereotype, those who do are often times the products of being
under-educated in financial management.

Dave Ramsey, author of Total Money Makeover, advises to “tell your money what to do, instead of
wondering where it went… Be proactive with your money – do a budget, get rid of debt, and save.” That
recommendation is one that should be taken to heart for all generations. Having a plan for your
earnings replaces the questions of where, how, and when with feelings of confidence, control, and
freedom.

Here are several tips for creating a successful personal financial plan:

1. Build a budget
   ‐ Keep it simple and convenient! There are many apps available on the Android and iOS
   markets that help you customize a budget based on your financial needs and identify
   variances from actual amounts spent.
   ‐ Select a time period in relation to the frequency of your income and bills. If you are paid
   twice a month, and most of your bills are due once a month, create your budget based on a monthly interval.
   ‐ List all constant, necessary expenses (utilities, insurance, telephone, loan payments, etc.)
   and track those based on the monthly due dates.
   ‐ Calculate your residual income – what is left over for saving, investing, and spending?
   ‐ Do not deviate from the budget just for convenience. Budgets are meant to be flexible, but
   not changed frequently. If you alter your spending each month based on your
   circumstances, the benefit of having a budget is not reaching its full potential.
2. Save & Invest
   ‐ Treat your savings and investment plan as a “bill”. When you give yourself the option to
   change how much you want to save/invest from paycheck to paycheck, the likelihood of
   setting aside a substantial amount is minimal. When you choose to treat savings as a
   ‘necessary expenditure’, there is greater opportunity for you to accumulate a growing
   reserve at a more rapid pace.
   ‐ Have part of your paycheck direct deposited into your savings or investment account
   (suggested amount for millennials is 10‐20%). This will create an “out of sight, out of mind” mentality which will lessen the temptation to use that money in other places.
   ‐ Reduce emergent financial stress by having a separate savings account with enough funds to cover 3 – 6 months of expenses.
   ‐ Think long term and create goals! What do you want to accomplish with your money in the next 5 – 10 – 25 years? By requiring yourself to save, you are allowing yourself to be able to afford a large down‐payment on a house/car, take a long vacation, build up retirement funds, etc.
3. Evaluate residual income spending habits
   ‐ After you’ve accounted for your fixed financial costs, you will know what is left for
   discretionary spending (morning coffee, a new pair of shoes, a weekend getaway, etc.)
   ‐ Depending on the amount of debt you have and the associated interest rates, it may be wise to make additional principal payments on loans and credit cards.
   ‐ If you are not able to save between 10‐20% of your take home income each month, consider the following:
    Exchange 2 nights out per month with 2 nights in per month
    Confirm you are paying bills on time – most companies charge late fees when payments are not received by the due date. Late charges result in wasted money!!
    Use your budget as a monetary calendar to ensure you are not charged any overdraft
   fees (again, wasted money!!)
    Identify any expenses that could be eliminated (say a Netflix or SiriusXM subscription) In essence, by eliminating an unnecessary expenditure you are giving yourself an internal raise!

Financial plans – your budget, savings, and spending habits – will differ from person to person, and also
vary in different stages of life. The priorities of how you save and spend will change dramatically from
the time you receive your first real paycheck to when you buy a house or have children. It is extremely
important to make budgeting and saving a lifestyle choice in the early years. At first, it may be hard to
change your spending perspective and easy to postpone saving until later. Remember: Short term
sacrifices yield BIG rewards in the long run.

Written by: Brandi Dykes, CPA