The Millennial’s Guide to Budgeting

August 24, 2022
By Rick Gibson, CFP®
Avocado Toast West Financial Services

When you hear the word, “millennial,” what first comes to mind for many is a generation of entitled, social media addicted, avocado toast lovers who worship at the shrine of Starbucks. But, in truth like prior generations, millennials have a great capacity to learn from others and put structure to their wants and needs. And while purchases such as avocados and fancy coffee drinks can quickly become expensive, millennials can have their avocado toast and eat it too.  

As a proud millennial myself, I will lay out some tips and tricks for budgeting in the 21st century. 

  • Read The Fine Print. Have you ever been to a concert venue or baseball game and thought the food prices are outrageous? Of course you have, but there can be ways around this problem. For example, single-serving food items may be brought into Nationals Park as long as they are carried in your hands or in an approved bag. Concerts at Wolf Trap are even better, you are able to bring in food and drink (that means wine, as well). You can check a venue’s website to find their terms and conditions before your event. 
    • Estimated Savings: $50 per event
  • Be Strategic With Travel Plans. Who doesn’t love to travel? Often the biggest downside to traveling is the cost. However, if you are strategic and plan ahead, you can save money by booking your flights months ahead of time. You can save even more money if you are flexible in your travel plans.  Oh, and if you don’t feel like spending hours scouring the internet for good deals, I suggest a membership to Scott’s Cheap Flights. A subscription costs $50, annually, and provides access to a database of good deals. While the subscription price is an additional expense, if you can save at least $50 on one travel opportunity a year, it pays for itself. I’ll let you in on another secret - if you purchase a membership on Black Friday, it is even cheaper. 
    • Estimated Savings: $500 per year
  • Prepare Your Meals in Advance. Reducing how often you eat out is an easy way to decrease frivolous spending. Bonus points if you prep those meals based on the local grocery store deals for the week. I like to prep my meals on a Sunday night and I try to pick food that is healthy, so not only am I saving money, but I’m also taking care of myself, physically. Another pro tip - invest in some reusable containers from Costco. 
    • Estimated Savings: $50 per week
  • Maximize Credit Card Points. In addition to being a tool for improving your credit score, credit cards can also be a great way to accumulate points for travel. I found a card that best suits me, and now I earn points for all purchases. Even better, I earn three times the amount of points on travel purchases. If you are married and looking to earn even more points, you can add your significant other as an authorized user. Be informed about the credit cards you have and pay off the balances each month. In addition, make sure to check your statements regularly for accuracy and be aware of hidden fees. 
    • Estimated Savings: $500 per year

Okay, so let’s recap. Let’s say you go to a total of 5 concerts and baseball games per year. Assume a couple of vacations throughout the year, meal prepping 40 weeks, and let’s say you are paying at least a little attention to tracking your credit card points. With these assumptions I estimate you can save up to $3,250 a year. Using some back of the napkin math, $3,250 invested annually for 20 years, assuming a conservative 5 percent rate of return, will give you an account balance of over $100,000. While $100,000 may not seem like a life changing amount, what if you could find a way to save even more? Say, an extra $9,000 per year? Boom. Hello, early retirement.  

Try incorporating a few of these tactics into your own budgeting process. I encourage you to increase your retirement contributions or after-tax savings with all the excess cash you will have on hand. You will be amazed at how quickly the savings can add up. Albert Einstein said, “Compound interest is the eighth wonder of the world. He who understands it, earns it … He who doesn’t … pays it.” The sooner you start saving the better. Trust me, your future self will thank you. 

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