By Delta Jones-Walker, Gary Crusader
They have often been referred to as the “entitled generation.” They grew up with cell phones, the internet and the expectation that everything should have happened “yesterday.” Falling in the age group of approximately 19 to 35, they are MILLENNIALS! Because many in this group may feel that living in the now is most important, I decided to pen this column to help emphasize the importance of millennials mapping out their financial future. Here are a few tips to help get started:
- Economize- Once you get your first real job and are on your own, it is tempting to feel the excitement of spending all of your paycheck, and maybe even more. Take a deep breath, step back, and be thoughtful when it comes to spending. Don’t overspend on a bigger apartment or fancier car than you need. You have an entire lifetime to build your finances, and buy the things you may want. Starting out, learn the value of a dollar. It’s more important to pay off debt and build up some savings than to start a life time habit of overspending and incurring debt.
- Pay down debt – As a recent college graduate, you may have student loans or even credit card debt. Set up a plan to pay off your debt. Lay out your various debt obligations, your monthly payments and the interest rates on each. Build a plan to focus on the highest interest rate debt first. Build this payment plan into your monthly budget. Commit to having your debt paid off in a reasonable time, allowing yourself the satisfaction of accomplishing your task and having a little balance.
- Avoid new debt – A new job often means new found freedom. Credit will be more available than it has ever been before. Having access to this new flexibility is very tempting, but please be careful. Think hard about new purchases. How do they work into your annual budget, your debt plan and your savings goals? Try to avoid new, unnecessary debt. Build up your savings first before purchasing big ticket items.
- Establish good credit – Now is the time to build your personal credit profile. Make a habit to pay all outstanding debt on time, every time. A good credit record will make it easier for you to qualify for home and auto loans in the future. Good credit goes beyond future purchase flexibility. It also may help you get an apartment, buy insurance and even land a job.
- Start your retirement savings- The easiest way to start your retirement savings is by enrolling in your company’s 401k plan. Take advantage of the structure set up by your company and the possibility of company matches. If you don’t have access to an employer plan, set aside enough money to contribute to an Individual Retirement Account each year. This can build your savings and reduce your taxes at the same time.
- Automate other savings – Set up a savings account that you can use for special purchases or short-term goals. Make savings automatic by scheduling regular transfers from your checking account as soon as you are paid. With automated savings, you can put your savings in the back of your mind, causing you to manage your monthly cash flow without it. Over time, you will be amazed how much your savings account has grown without a lot of maintenance or attention on your part.
- Purchase life insurance – As your family grows, it is time to start looking at how an unexpected event may impact your spouse or children. If others are relying on you and your income, it is time to consider the need for life insurance. Look at a term policy to cover the period of time you are at risk. Determine the amount of coverage needed to support your family in the event of your absence. Avoid products that combine insurance and investments. These are two different needs that should be handled separately. Get the term insurance you need for the time period at risk and allow your investments to grow on their own and independent.
Many of the tips not only apply to millennials but anyone who is looking to get their financial affairs in order. The younger you are when implementing these practices, the better your chances of being where you want to be financially by retirement. Don’t delay, start today!
Connect with Delta Jones-Walker and Atled Financial on Facebook, Twitter: @Atled_Financial and LinkedIn! To schedule a complimentary consultation or a presentation to your group or organization, call 219-513-3710 or email email@example.com and mention this column. Topic ideas for this column are welcome!
*Securities and advisory services offered through Woodbury Financial Services, Inc., member FINRA/ SIPC. Insurance services offered through Atled Financial Group 717 B Main Street Schererville, IN 46375 which is not affiliated with Woodbury Financial.