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Budgeting for Millennials: Foundation of a Successful Financial Plan

Savings, Thrift & Investment	1140 VIEWS
Savings, Thrift & Investment
1140 VIEWS

Thursday, January 07, 2021 / 2:54PM / By Bukunmi Adejobi, Proshare Research, and Taiyese Nifemi WebTV / Header Image Credit: iStock/Getty Images

Budgeting is a strategy that entails creating a plan to spend your money on the journey to financial freedom. In the maiden edition of the Millennial Talk, the programme anchors discussed why, when, and how to plan personal budgets.

For millennials who want to attain financial freedom, the anchors observed that budgeting is a financial lesson that cannot be overemphasized. Building wealth over time through the committed study of personal finance, and the development of financial intelligence skills is crucial for young people preparing a stable future for themselves. The anchors noted that "time is a short-stay guest, and the earlier young people build lifetime plans and personal budgets the better for them. Growing old could be great or terrible depending on the habits you acquired when you were making millennial choices".

One of the anchors, Bukunmi Adejobi noted that "the mindset that most people have about budgeting being associated with poverty, selfishness, or lack is one that should be changed through constant financial reorientation". She insisted that 'budgeting is not a negative idea', she noted that it does not mean people should not spend money, it means that people should spend money on needs rather than wants.

According to the programme anchors, budgeting is important because it ensures that individuals' do not spend more their incomes, thereby creating avenues for saving which in turn provides individuals with the capital needed to invest and earn returns above the inflation rate.

With the unemployment rate in Nigeria at 27.1% in Q2 2020 according to the Nigeria Bureau of Statistics, Nifemi Taiyese noted that "this has motivated innovativeness and vibrancy among millennials who have increasingly developed business ideas as SMEs that have turned out to be champions in their chosen sectors. Adversity has bred creativity among millennials" Taiyese said.

Taiyese, further noted that budgeting for young entrepreneurs was quite different from their older counterparts as most business owners deal with fluctuating income. Adejobi observed that the first step towards intelligent personal finance was to separate business from personal financial obligations. She said that it was important that millennials engaging in meticulous record-keeping and financial planning based on projected cash flows including minimum monthly income. This, according to Adejobi, would help millennial businesses to attain growth and sustainability whilst ensuring that the business owner meets with his or her other obligations.

Due to the novel coronavirus (COVID-19) pandemic in 2020 which has prompted a rise in remote work, millennials must note that as they plan their budgets for the year, they need to emphasize digital accessories such as laptops, phones, and the internet; data, airtime, and Wi-Fi. Other recommended budgeting categories should be household expenses, salaries to workers, entertainment, charity, transportation, self-care, savings, online courses, and investments.

Also, the two anchors explained that there was a need to create a flexible and realistic plan that includes a spending forecast for the year that could help with long-term financial planning. The following are tips to follow in the desire to stay on a budget:

Personal discipline stemming from a mental shift.
Having accountability partners
Curbing excess spending and impulse buying.
Following the 72-hour rule before adjusting your budget
Being realistic. Having an unrealistic budget can set you up for failure from the beginning.

The 21^st century and the advancement of technology have introduced several applications developed by software experts which makes financial terms and activities such as budgeting to be made easy. A few APPs that can be downloaded for a digital experience to help in budgeting and tracking expenses include;

Mint

Budget App and Spending Tracker by Bookipi Pty Limited

Spendee

Free courses on how to create a budget can also be accessed on clevergirlfinance.com

Budgeting comes with a huge deal of sacrifice, self-discipline and, delayed gratification. To make an effective budget, individuals must be willing to work with detailed and accurate information about their earnings and spending habits, craft a financial vision that motivates them while starting to adopt better money management habits designed to achieve financial goals.