6 Key Lessons from Broke Millennial to Build a Strong Financial Foundation

By Linkup Influence Updated: Aug 16, 2024, 20:21 IST

"It's not about depriving yourself of things you love, but about making conscious choices that align with your values and goals."

Broke Millennial: Stop Scraping By and Get Your Financial Life Together, written by Erin Lowry, provides an empowering and realistic road map to financial stability. This book offers a new way of looking at money—rather than letting yourself be paralysed by technical terms or shackled by unnecessary regulations. Rather than cutting out all of your favourite things, it's about intentionally choosing choices that support your beliefs and help you achieve your goals. To empower you to direct your financial destiny, we have paraphrased six essential teachings from the book into a conversational style.

1. Face Your Financial Reality

Being honest with yourself about your finances is the first thing that you need to do. It may be tempting to avoid looking at your bank statements or ignoring that growing credit card bill, but facing these facts is the most important first step towards change. This doesn't mean you need to blame yourself for past mistakes or feel guilty about where you are. It just means getting a clear, judgment-free picture of your finances. By recognising areas where you can improve, you're setting yourself up for a successful financial transformation.

2. Create a Budget That Works for You

Don't use the pre-made bills you might find online. Everyone has a different financial position and set of goals, so there is no one way to make a budget that works for everyone. You should make a budget that represents your own goals and values. Plan your budget so that you can afford to go out to eat and travel if those are things you enjoy. You should make a budget that fits your needs and helps you reach your financial goals without making you feel deprived.

3. Pay Off High-Interest Debt

When it comes to tackling debt, start with those high-interest balances. Credit cards, with their sky-high interest rates, can quickly become a financial black hole. Focus your efforts on paying off these debts as quickly as possible to save money on interest and free up your finances. It’s like getting rid of the heavy weights that are slowing you down—once they’re out of the way, you’ll find it much easier to move forward with your financial goals.

4. Build an Emergency Fund

Things can go wrong at any time, so having an emergency fund is important for your finances. Aim to save enough money for three to six months of living costs in a separate account that is easy to get to. This fund will save you from going into debt if you have to pay for things like car repairs or hospital bills that you didn't plan for. Think of it as a safety net for your money—something you can use when things go wrong.

5. Invest in Your Future

It might feel tempting to put off investing, but the earlier you start, the more you’ll benefit from compound interest. Open a retirement account, like a Roth IRA, and begin putting money aside for your future self. Even small, consistent contributions can grow significantly over time. Investing isn’t just about building wealth; it’s about securing a comfortable and stress-free future. Start now, and let your money work for you.

6. Practice Financial Self-Care

Financial self-care isn’t just a buzzword; it’s a vital part of managing your money well. This means making thoughtful financial decisions that align with your goals, resisting the urge to spend impulsively, and avoiding lifestyle inflation—the tendency to increase your spending as your income grows. Cultivate a healthy relationship with money by staying mindful of your financial habits and focusing on what truly matters to you.

By embracing these lessons, you’re not just scraping by; you’re actively building a solid financial foundation that will serve you well into the future. It’s about making empowered choices that reflect your values, setting yourself up for long-term success, and enjoying the peace of mind that comes with financial stability. So, take these lessons to heart and start making those deliberate, value-aligned choices today. Your future self will thank you!

Broke Millennial to Build a Strong Financial Foundation