File: Millennials should start by adding up all sources of income, then they should tally up monthly expenses.
JOHANNESBURG - In the current economic climate, South African millennials are having a hard time saving, according to a personal finance guru.
While many of the ways in which our world has changed are for the better, financial security is one aspect of life with which many 20-somethings struggle, says Kayla Sloan.
According to Sloan unemployment, high student debt, lack of financial knowledge, the struggle to keep appearances and the struggle to accomplish financial independence are the reasons why millennials are battling to have a healthy budget.
"Saving, investing, budgeting, and even cutting back can seem ridiculous when you struggle to simply pay for basic necessities. Budgeting can be crucial to one's financial future. But for millennials, budgeting can feel like an impossible feat," says Sloan.
Graham Orber a financial advisor at Nerd Wallet says millennials need to look at the bigger picture. "If you find you're not bringing in enough money from work -- or if you need to find a job -- start the hunt for something better," he says.
"Millennials need to take advantage of professional networking sites such as LinkedIn to connect with people who may have opportunities.
"If the job market in your area is particularly limited, consider relocating to a city with better prospects and give 100% to even the most mundane tasks to stand out and advance within your company.”
In Orber's view, creating a budget also allows you to live comfortably within your means with enough left over to save for long-term goals.
Millennials should start by adding up all sources of income, then they should tally up monthly expenses.
This includes debt, and other living expenses such as rent, transportation, food and entertainment, among other things.
"A budget worksheet will ensure that no expenses are omitted," he advises.
The expenses should be subtracted from income, to help millennials visualise what they have to work with monthly.
"You can then set goals and decide how the surplus should be invested. If your expenses exceed your income, you'll need to figure out how to cut expenses, perhaps by scaling down to a smaller home or car, or increase income by picking up additional hours or a better job.
"Tracking small daily expenses can help you see which can be reduced or eliminated," he says.
After acquiring basic numbers, "refine your plan", says Orber.
"Pay yourself first and deposit something each month to savings once that is taken care of pay basic living expenses and pay down any debt before spending on entertainment."
The use of technology can also be beneficial and convenient when organising your budget. Using free apps could save you on data and time, he adds.
Personal Capital: This app can be used on an iPhone, iPad or your computer, it is helpful to understand your cash flows, optimise investments and see all your money in an easy way.
Mint: This app can be used on Androids and Windows phones. You can link to your credit, loan and investment accounts to track activity.
LearnVest: This app links to accounts and files purchases into category folders. Users also get access to lots of relevant articles and information, which is particularly helpful to those new to managing finances.
Level Money: This app for Android and iOs lets you know how much available cash you've got for the day, the week and the entire month.
Sticking to a budget
"Having a great budget is worthless unless you stick with it," says Orber.
There are strategies to stay on track with a budget.
Put your financial goals in writing to maintain focus.
Keep track of your credit score.
Establish a separate email account for financial correspondence, bills and alerts.
Set up an automatic savings plan for at least 10 percent of your income.
Don't worry about keeping up with your friends; make lifestyle choices you truly can afford.
Explore student loan forgiveness programs and consider debt consolidation. When possible, pay extra on your debt to reduce the amount of interest you will pay.
Orber says if you slip, "forgive yourself" and get right back on budget. Even with some inevitable mistakes, a budget is the first step toward home-ownership, a comfortable retirement and other major financial goals, he says.