Broke Millennial

1. Master Your Money Mindset for Financial Empowerment

It’s understanding money—not just having it—that equals empowerment.

Control vs. Being Controlled. Taking charge of your finances starts with understanding your relationship with money. Are you letting money control your life, or are you controlling it? Empowerment comes from understanding how money works and how you relate to it, not just from having more of it.

Family History and Roadblocks. Your relationship with money is shaped by your upbringing. Were finances discussed openly, or were they a source of tension? Understanding these influences helps identify your money anxieties and misunderstandings. For example, growing up in a household where money was a constant source of stress can lead to anxiety around spending, even when you can afford it.

Actionable Steps and Goals. Identify your psychological roadblocks about money and set three financial goals: short-term, medium-term, and long-term. This helps you take actionable steps toward improving your financial situation. For example, a short-term goal might be to create a budget, while a long-term goal could be to achieve financial independence.

2. Know Your Financial Standing and Where You're Headed

Evaluating your results will help you navigate the following chapters so you know where you should improve your knowledge.

Financial Benchmarks. Compare your savings, debt, and investing habits against benchmarks to stay on track. Key ratios include retirement savings by age (e.g., having 1x your salary saved by 35) and emergency fund coverage (3-6 months of living expenses). These benchmarks provide a motivational framework for your financial journey.

Debt-to-Income Ratio. Calculate your debt-to-income (DTI) ratio by dividing your monthly debt payments by your gross monthly income. A lower DTI is better, with a target of 40% or less. This ratio is a key factor lenders use to determine whether to give you a loan, and it helps you understand how much more debt you can realistically handle.

Net Worth Snapshot. Determine your net worth by subtracting your total liabilities from your total assets. This provides a snapshot of your overall financial health. Tracking your net worth regularly helps you see if you're making progress toward your financial goals and forces you to confront your spending, debt repayment plan, and savings strategies.

3. Budgeting Styles: Find What Works for You

At the very least, you need to understand how much you have coming in and how much is going out each month.

Budgeting for Control. Having a budget puts you in control of your money, regardless of how you feel about the B-word. It's imperative to select a budgeting style that works for your financial situation and personality. Whether you're hands-on or laid-back, there's a method to suit you.

Budgeting Options.

• Cash Diet: Pay for everything in cash to curb overspending.
• Tracking Every Penny: Meticulously record every financial transaction to identify spending patterns.
• Envelope System: Allocate cash to specific categories (envelopes) and stop spending in that category once the money is gone.
• Percentage Budgeting: Allocate percentages of your income to fixed costs (50%), financial goals (20%), and flexible spending (30%).
• Zero-Sum Budgeting: Assign every dollar a "job" and use last month's income to pay for this month's expenses.

Budgeting Apps. Budgeting apps can help automate some of the process and perhaps even streamline beautiful charts and graphs of your spending. However, be sure to read the fine print before linking an app to your financial accounts.

4. Ditch Unnecessary Banking Fees and Maximize Savings

You don’t have to use financial products just because Mom and Dad did or because there’s a branch on your block.

FDIC Insurance. Ensure your bank has FDIC insurance to protect your deposits up to $250,000. This is a non-negotiable requirement for any financial institution you entrust with your money. FDIC insurance covers checking accounts, savings accounts, money market deposit accounts, and certificates of deposit.

Checking Account Fees. Ditch unnecessary fees on your checking account, such as maintenance, annual fees, minimums, and overdraft protection. Internet-only banks often provide the most competitive deals with no or very few brick-and-mortar locations.

Savings Account APY. Your savings account should be earning an interest rate of at least 0.75% APY. The common offer of 0.01% is a joke—both you and your money deserve better. Internet-only banks can afford to offer higher APYs because they don't have the overhead costs of traditional brick-and-mortar banks.

5. Credit Reports and Scores: Your Financial Report Card

A strong credit score proves to a lender that you’re reliable, which directly correlates to favorable loan terms.

Credit Score Importance. Your credit score and report are used to judge your levels of responsibility. Potential landlords may run a credit check to look for red flags like a history of missed payments or a heavy debt load compared to your income.

Credit Score vs. Credit Report. The credit report contains the information used to generate your credit score. The credit score is the simple, easy-to-understand piece of information we can all use to judge each other, even though the report is really what matters most.

Credit Score Factors. The five factors used to determine your credit score are:

• Payment history (35%)
• Amounts owed (30%)
• Length of credit history (15%)
• Credit mix (10%)
• New credit (10%)

6. Conquer Consumer Debt with Strategic Repayment

You’re more likely to fess up that you have a guilty pleasure Nickelback playlist on Spotify than admit to carrying consumer debt.

Debt Shame and Reality. It’s easy to feel shame about carrying consumer debt, but you're not alone. The average American carries thousands in credit card debt. Removing the stigma is the first step to tackling the problem.

Debt Repayment Options.

• Debt Avalanche: Pay off debts from highest to lowest interest rate.
• Debt Snowball: Pay off debts from smallest to largest balance.
• Balance Transfer: Move high-interest debt to a card with a 0% APR promotional period.
• Personal Loan: Consolidate debt into a single loan with a lower interest rate.

Zero-Sum Budgeting. The Zero-Sum Budget is one of the most effective ways to break the paycheck-to-paycheck cycle as well as aggressively pay down debt and hit other savings goals.

7. Student Loans: Navigate Repayment and Forgiveness

Student loans are extremely difficult to discharge, even in bankruptcy.

Federal vs. Private Loans. Always choose federal student loans over private loans due to the perks they offer, such as subsidized loans, grace periods, deferment or forbearance, income-driven repayment plans, and student loan forgiveness.

Income-Driven Repayment Plans. If you're struggling to meet the minimum payments on federal student loans, enroll in an income-driven repayment plan. These plans cap your monthly payments as a percentage of your discretionary income.

Student Loan Forgiveness Programs. Exchange years of work in public service for discharged loans. Common programs include Public Service Loan Forgiveness (PSLF) and Teacher Loan Forgiveness.

8. Save Now, Even with Debt, to Secure Your Future

Paying yourself first also implies that you have some understanding of your cash flow, which means that, yes, you must set a budget.

Pay Yourself First. The first thing you do with a paycheck is to save a chunk instead of waiting until the end of the month and hoping there is some left over. It’s a tweetable but actionable piece of advice, and therefore also some of the most diluted advice you’ll find on how to manage your money.

Emergency Fund. The emergency fund is part of your overall savings strategy. You should have goals other than just a fully funded emergency savings account—like retirement—but this is a foundational part of your financial journey.

The Fuck-Off Fund. The Fuck-Off Fund is the money someone needs to be able to walk away from any terrible situation or person with two middle fingers in the air, if needed. And sometimes it is needed.

9. Navigate Finances and Friendships with Honesty

Navigating finances and friendship.

Financial Friendship Dynamics. As you mature into a money-earning adult, you’ll start to notice a variation in financial dynamics with friends. You should suss out the financial terms of each of your friendships and abide by your established script, even if that means being brutally honest about your financial hang-ups.

Be Honest. You don’t have to disclose your salary or student loan debt or general lack of budgeting skills to your friends, nor do you need to justify your caution even if you’re not having financial problems but rather simply don’t value spending your money on [insert event here].

Offer a Cheaper Alternative. One way to still participate with friends in something fun but without breaking the bank is to offer other alternatives that are more affordable to you. You can use the old compliment sandwich technique to offer a solution instead of just stating that your friend’s spending habits are an issue for you.

10. Get Financially Naked with Your Partner for a Stronger Future

The timing of getting financially naked is a delicate thing.

Financial Intimacy. Getting financially naked with your partner means being open and honest about your financial situation, including debts, credit scores, and spending habits. This transparency builds trust and allows you to create a joint financial plan.

What Needs to Be Shared. You two should be willing to share:

• What type of debt you have.
• How much debt.
• Your credit reports and scores.
• How you’re currently handling the debt.

Creating a Financial Plan Together. Any plan you create with your partner needs to take three things into consideration:

• Is it good for your mental health?
• Is it good for your wallets?
• Is it true to your values?

11. Homeownership: Is It Right for You?

Millennials have a fear of commitment about buying a home.

Renting vs. Buying. Renting isn't always throwing away money. It can be a smart financial move if you can't afford to buy in your local market, don't plan to live there long, have better career opportunities in a high-price market, or need to be transient for your career.

Affordability Calculation. Don't rely solely on what a mortgage broker says you can afford. Use the 28% rule (housing expenses should be no more than 28% of your gross income) as a guideline, but be realistic about your comfort level and financial limits.

Down Payment Considerations. Putting down less than 20% can make homeownership more accessible, but it also comes with risks like higher interest rates and the need to pay private mortgage insurance (PMI). Weigh the pros and cons carefully.

12. Negotiate Salary and Get Paid What You Deserve

There’s no bigger enemy in a negotiation than your self-doubt.

Negotiation Importance. Don't make the mistake of not negotiating your starting salary. This can cost you hundreds of thousands of dollars over the course of your career.

Know Your Worth. Research the market rate for your position and skills. Use websites like Salary.com and GlassDoor.com, and talk to people in your field. For freelancers, talk to other freelancers about rates.

Go into a Meeting with Proof of Your Worth. Have a success folder filled with metrics, positive feedback, and examples of your accomplishments. Track improvement and know who can speak to your worth.

Last updated: March 23, 2025