Millennials: How to Become Financially Savvy

Money used to be something that I dreaded and avoided talking about at all costs. Now I feel quite the opposite. I want to learn as much as possible, so that I can support myself and thrive in the business world. I realize that I  need a game plan for making, saving and improving my relationship with the dollar.

I turned to a friend, Christina Miller, who is a financial expert, to lead us down the path to success. Leading a super life means being able to be super with our finances. Money does not equal happiness, but it is something we should all have a solid grasp on. 

Current research shows that Millennials are the demographic that is most likely to be highly worried about financial issues. This data is corroborated by both a recent Gallup poll and the American Psychological Association’s survey, Stress in America™: Paying with Our Health, which found that 75 percent of Millennials find money to be somewhat or a significant source of stress, compared to 64 percent of other Americans.

So what can Millennials do to combat financial worries? One of the first and most important steps to take is to become more financially literate. Once you have an understanding of personal finance, saving, budgeting, etc. it is easier to be more in control of your finances, which is liberating. And once you realize that money and finances is not a scary, taboo topic, managing personal finances actually becomes fun. Here are some of the best, most accessible tips for people just beginning to take control of their personal finances, but that also remain relevant through the course of a lifetime.

1.     Start saving

Seriously, just start. Regardless of how little you are able to save in the beginning, the most important thing is developing the habit of saving. Like nearly everything, being successful with saving is about momentum, so starting is half the battle.

Most personal finance experts suggest having an “emergency savings” buffer to cover six months of all your necessary expenses. To calculate how much this is for you, determine how much you pay for necessities each month (i.e., rent/mortgage, insurance, utilities, food, car payment), and multiply by six. These costs will vary depending on where you live, your age, work benefits, etc. These funds need to be liquid and easily accessible, meaning that they are held in a savings or checking account, and not invested or tied up in a certificate of deposit. Having an emergency fund enables you to handle unexpected life changes with as little financial stress as possible, and these funds should truly only be tapped into in the case of an emergency or very unexpected (and critical) event.

In addition, by beginning the savings process, you can also start looking toward big ticket items, such as a big vacation, new car or a house. In order to start building your savings account, make the transfer into a savings account a regular, non-negotiable monthly occurrence, and it will eventually become painless. 

2.     Track spending

One of the most effective ways to control spending is to simply pay attention to it. You can use a software like which will interface with your financial accounts, or simply use a spreadsheet to track what you spend (my preferred method). At the end of each day, simply record and review all of the day’s expenditures. Not only will this allow you to clearly see where all of your money is going, but it has the psychological effect of making you more accountable for your spending. When you see each thing you have purchased as a line item on a spreadsheet, it can make you think twice about it. Beware—the first month you track, you may have an uncomfortable realization (read: panic attack) of how much you spend on certain items. In my case, it was — I spent WHAT at the bars? — followed by the pledge to never go out again. Tracking my spending really taught me the lesson that spending $20 here and $30 there really adds up pretty quickly.  

3.     Develop a budget

Developing a budget will help you to figure out what you can afford to spend, how much you can save, and the amount you should invest. A common question is, “How much should I spend?” It may sound like common sense or overly simple, but the answer is, “Less than you make.” Strategies and methods for creating a budget could be discussed in a whole post of its own but it can be condensed down like this:

First, start by separating your expenses into two categories: fixed and variable. Fixed expenses are those that are the same each month, such as car payment, rent, club memberships, etc. Variable expenses change monthly, such as gas, electricity, food, etc. Fixed expenses will remain static each month, but the amount allotted to variable expenses will need to be averaged. From here, divide your spending into necessities, savings and luxuries. Look at your net income to determine what amounts you can comfortably spend in each category. Prior to setting a budget, it can be helpful to record everything you spend, as discussed in the tip above, in order to get an accurate estimate of your expenditures.

When developing your budget, it is critical to identify what items are necessities and which are luxuries. Items like rent, mortgage, electricity and groceries are necessities. A daily latte, the latest iPhone and even internet are not. Necessities and savings should always take precedence, and what is left over can be spent on luxuries.

Both long term and short term financial goals should be considered when creating a budget. Short term goals might be paying off a credit card or saving for a television. A long term goal might take years to reach and could include paying off student loans or buying a house.

4.     Make your money work for you

Most savings accounts (especially those at big banks) won’t earn you very much interest right now. However, if you shop around, you can find some community banks or credit unions that will offer 1% or higher. In fact, Lake Michigan Credit Union has a checking account that earns 3% interest. This is higher than most current CD rates, and nearly unheard of in the world of short-term savings or checking accounts. Once you have established the habit of saving, it is important to ensure that your money isn’t just sitting there—or worse, that you are paying account maintenance fees to keep your money in the bank.

5.     Find places places to cut spending

Financially-savvy individuals are always looking for ways to reduce expenditures. While some personal finance experts recommend things like eliminating your daily latte or the pricy pressed green juice, I don’t think it’s necessary to condemn the little joys. The key to responsible spending is to evaluate what expenditures are necessary, enhance your life or mean the most, and mindfully choose these, understanding that there may be a tradeoff involved. Once you are tracking your spending and seeing exactly where you money is going, it makes it easier to analyze what purchases bring the most satisfaction. The items that you purchase out of habit, or that you don’t truly want or need should be the first to be cut. In addition, it is important to remember that small things add up to big things. For example, a daily pressed juice at $9 a piece adds up to $3,285 per year. If this treat is something that is important to you, it may be worth it, but if you’re looking to travel to Europe this year or need that money to pay down student loans, you might consider buying a $200 juicer and preparing your own.

6.     Online shopping: proceed with caution!

Online shopping has completely changed the landscape of how we purchase. While the convenience factor of being able to order what you need from the comfort of your couch can’t be overstated, online shopping has also made it too easy over-spend. With websites storing credit card information, shipping addresses, etc., a purchase can be made in a few seconds flat. One of the negative implications of this is that people are not fully considering the purchase before they buy. It is so easy to pull the trigger on an item, that the contemplation of whether or not it is actually needed is often lost.

Although you can find better prices on many items online since comparative shopping is much easier, consumers are spending more overall, in part because the spending process is more abstract. Paychecks are directly deposited and the money is spent without even needing to pull out a credit card. As a result, consumers aren’t even seeing actual money coming in or going out, which makes the very real issue of debt seem more abstract as well.


Christina Miller is the Chief Editor and Publicist for MoveCU, an online comparison marketplace where millions of consumers shop for loans and deposit accounts. As a personal finance expert, she writes on topics ranging from saving and investing, to current economic conditions. Christina's interests also include holistic health and wellness. She holds a Master’s degree from the University of California, Santa Barbara, where she studied South Asian Religious Studies, with an emphasis on Indian indigenous healing modalities, including Vedic medicine and Āyurveda. In her spare time, Christina loves to practice Kundalini yoga, spend time at the beach, frequent the Santa Barbara farmers’ markets, experiment in the kitchen creating plant-based meals, and experience different types of holistic healing treatments.