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The book Broke Millennial by Erin Lowry is a conversational guide helping young adults navigate money without anxiety.
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Here are eight lessons from the book Broke Millennial: Stop Scraping By and Get Your Financial Life Together.
Credit card debt
A credit card is a useful financial tool only if you pay it off in full and on time every month. As a general rule of thumb, don’t charge more than you can afford to pay off every single month.
Credit score hack
To have a good credit score, the book suggests making small purchases on a credit card every month to keep the credit utilisation ratio low and paying off all your bills on time.
Pay yourself first
The book emphasises the importance of saving money, even when you’re in debt. Saving money prevents you from sinking deeper into debt and provides a buffer.
Budgeting 101
Following a budgeting style more tailored not only to your financial situation but also to your personality helps. It details different styles, including the cash diet, tracking every penny, the digital envelope system, etc.
Cash diet
It involves subtracting your monthly fixed costs (bills, savings, investments) from your monthly income. Then divide the remainder by four; that is your weekly budget.
Tracking every penny
It involves tracking every transaction, down to a single paisa. The book suggests reserving an hour on the weekend to enter your transactions into a spreadsheet.
Envelope system
Take some time to sit down and write out your financial responsibilities and priorities into categories that will become envelopes (eg: rent, utilities, transportation, retirement, debt, emergency funds).
Percentage system
It outlines three main categories for spending your monthly salary: fixed costs (allocate 50%), financial goals (20%), and wants or flexible spending (30%).
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