4 ways millennials can cut their discretionary expenses

You’ve probably heard the line that millennials are throwing their money away on avocado toast and $5 coffees. While it might be true that millennials have different spending priorities than previous generations, that doesn’t mean they have more discretionary income. According to the Pew Research Center, Gen Y is making at least $2,500 less than their parents did at the same age. And small amounts of debt can become big problems quickly for an entire generation that doesn’t have the same buying power as their parents. If you’re a Millennial looking to optimize your spending habits, here are four things you can do to improve your financial health now.

1. Prioritize paying off debt

Whether it’s student loans or credit cards, the interest you’re accruing creates a steady leak of money from your accounts that could be used for more important things. Consider using something like the debt avalanche method to create an actionable plan that gets you out from under debt and frees up some much-needed funds.

2. Stop relying on credit cards

If you’re not using credit wisely, then it’s best to stop putting things on your card and pay cash. People often see credit lines as an extension of their income and use it to spend more than they earn, which creates high balances that accrue interest. If you’re unable to see credit as a temporary loan and not “extra” money, remove the temptation altogether by using cash or a debit card.

3. Don’t let social media cloud your judgment

If you’re getting feelings of FOMO (Fear of Missing Out) by scrolling through your social media news feeds, take a step back and notice how it’s triggering your impulse to spend. Social media platforms are great tools for staying connected but can easily make their users feel like they need to show off a certain lifestyle to their followers by purchasing high-ticket items they don’t need.

4. Make it more difficult to impulse buy

It’s no coincidence that online retailers take steps to make it easy for you to buy from them. If you’re guilty of forgetting what you’ve purchased or why then consider making it more challenging to impulse buy. Remove your stored payments, log out of accounts, set up Two-Factor Authentication, and unsubscribe from promotional emails or coupon sites. If you still find yourself mindlessly reaching for your credit card, make it a rule that any purchase must sit in your shopping cart for 24 hours before you check out. By putting time between adding something to your cart and checking out, you’re able to think about why you’re buying an item and if it’s necessary. You might worry that you’ll miss out on a limited-time deal or risk the item going out of stock, but with so many options out there, it’s more than likely you’ll still find it for the price you want after you’ve taken the time to think about whether it’s something you really need.

The bottom line

No matter your reason for adjusting your spending habits, taking the initiative to better your financial situation is always worth the effort. If you’re unsure where to start, use one of these four tips as a jumping-off point and start slowly. Creating good money habits isn’t a sprint but a marathon. The minor changes you make today can pay dividends tomorrow.