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Mindful Spending Habits for Budget-conscious Millennials

The world is still feeling the effects of the pandemic. Company budget cuts. Rising food prices. The general cost of living has skyrocketed.

According to the Pew Research Center, approximately only 51% of Americans are now classified middle class. That’s a significant drop from roughly 50 years ago when the figure sat at 61%.

While the spending habits of Gen-Z tend to be impulsive, millennials choose financial security.

Considering how global markets are currently performing, the U.S. recession risk remains above historical norms. If the latest data from S&P Global is a sign, the risk of recession remains high. This was done with the baseline comparison since World War II.

No need to worry. There are creative and mindful ways to make your finances recession-proof. By adopting mindful spending habits, saving your hard-earned cash will be easier than you think.

Reinforce your Emergency Fund

With a threat of recession or not, one should always have an emergency fund. This isn’t the same as saving money for a rainy day. An emergency fund is a personal budget that covers any unexpected expenses.

It gives you peace of mind and cushions the blow should you be left unemployed following a recession.

The aim here is to stay away from credit and avoid high-interest debt and high interest rates. It’s best to have at least three to six months’ worth of expenses saved.

Financial Wellness Apps

Maintaining financial wellness sounds like a tedious task. Financial wellness apps make the admin of your monthly budget more convenient and stress-free.

Mint

Mint is a budgeting app. The best part about this app is that it’s free. It also helps you work towards your financial goals.

Part of the Intuit umbrella of products, Mint allows you to connect all your accounts, including banks, loans and credit cards. The app gives a breakdown of your budget and shows where you’re spending the most.

Oportun

Previously known as Digit, Oportun is a money-saving app. There is a monthly cost involved after a six-month trial.

This app is best for those who tend to spend money on a whim. If you don’t have financial self-control, Oportun will reign you in by automatically moving money from checking to savings accounts. It does this by basing its algorithms on your spending habits.

Embrace Minimalist Principles

When Marie Kondo’s Netflix show burst onto our screens, we embraced the art of things that sparked joy. The rest was just trash.

Decluttering and choosing to live a life based on minimalist principles can be done. It starts with the simple things that cut down on your budget in the long term. Examples of these are:

  • Moving to a smaller home
  • Only purchasing reusable products
  • Cutting down on possessions
  • Investing in experiences and hobbies

At its core, minimalism is about making lifestyle choices based on simplicity and intentionality. Believe it or not, the practice does tons for your mental well-being.

Ethical Spending

Ethical spending isn’t just about supporting brands that align with your values and ethics. You can practice mindful spending with investments as well.

ESG (environmental, social, and governance) is investing your money in a company that practices sustainable and ethical methods. According to Business Insider, ESG funds can be just as lucrative as conventional investments. The risks are also generally lower than other market offerings.

Financial Independence Retire Early (FIRE)

Seen as another avenue to long-term financial freedom, FIRE allows you to retire far earlier than traditional retirement funds permit.

The key building blocks to making it a success are extreme savings, investments and frugality. The concept is based on the best-seller  Your Money or Your Life by Vicki Robin and Joe Dominguez. You should “evaluate every expense in terms of the number of working hours it took to pay for it.”

It does sound a bit extreme, doesn’t it? According to Investopedia, FIRE subscribers consider saving up to 70% of their annual income so that they can retire early. The end game is to live off small withdrawals from their accumulated funds.

The form of extreme saving doesn’t necessarily mean living large after retirement. Quite the contrary. Do you think 4% of your annual savings could cover living expenses? Well, that’s what you need to do.

Achieving financial security is all about intentionally making better financial choices.

Here’s where the mindful approach takes precedence. It gives you the chance to pause and think about every purchase, no matter how big or small.

Soon, it will come naturally. Sticking to your savings plan and budget will empower you to take back control of your spending habits.