Be money wise: Five easy steps for millennials and Gen Z to stay debt-free

Is there a way to manage funds better and stay debt-free?

Here’s how the millennial generation can gradually shrink their debt burden:

Although reducing the temptation to create more debts alone is not a permanent solution to clear off one’s piled up debts, doing so will certainly bring some relief and prevent you from worsening the situation further. You can do so either by cutting down the need for a credit card or freezing it completely until you repay all your debts, sooner or later.

Paying the minimum of your debts will only stretch the debt period and you will end up repaying the amount for the longest time possible. Doing so will make you pay a much heavier amount that one couldn’t even imagine – maybe twice or thrice the amount you had borrowed. It is advisable to go for small repayments only when you have a debt-ridden strategy as a backup; most importantly, when you are required to pay a large amount for clearing off one of the credit card bills, which otherwise may stress your wallet later.

In situations of higher repayments, an emergency fund can be of great help. Instead of using a credit card, one can use this fund, especially at times of emergency. So, sticking some amount in your savings account in order to be prepared for the future financial crisis that may arrive anytime, totally makes sense.

Investments in the form of SIPs are a great way of creating the right portfolio balance, which can be utilised to pay off debts. In fact, doing so is even easier today with the advent of so many apps. One can invest in any of the available SIPs or multiple SIPs using the app and purchase them digitally without the need of agents. These small investments not only help clear off on-going debts but also builds a corpus for retirement and future needs.

Lastly, one may need to make minor lifestyle adjustments, especially if you have lavish spending habits. Keeping a check on unnecessary expenses in such situations can help a lot in money management until all debts are repaid. Remember, you can always buy a car later or re-plan a vacation. Such things can wait. Moreover, whenever in debt, never shy to cry out for help from friends or relatives. In fact, approaching a debt counselling centre that offers free advice is one of the best options and is highly recommendable when it comes to cutting down the debt burden or finishing it off, once and for all.