5 Ways Millennials Should Handle Money Differently From Their Parents
Millennials are facing a different financial picture than what their parents did when they first started out. It is important to recognize the differences and to make changes as necessary so that you can make adjustments in the way you handle your finances from your parents. It is important to have a solid plan in place so that you can make real strides with your finances and be ready to retire when the time comes.
As a millennial, it is important to take your retirement planning seriously. Social security is changing and the amounts that are given are lowered as well as the eligibility age is becoming later each year. This means that if there is social security when you retire that it might not be the same amount that your parents are expecting to have as part of their retirement. The solution is to save aggressively for retirement in your 401(k) and IRA accounts. If you plan on retiring before 59, you will need to save for retirement outside of these accounts so you can access some money without taking a penalty for early retirement. If you are unsure about what to do, talk to a financial adviser who can help you invest your money.
Deal With Your Student Loans
Millennials are graduating with high amounts of student loan debt. This is changing the way they are handling their finances. It is affecting everything from buying a home to the types of vacations they can take. Once you graduate from college, it is essential that you deal with your student loans as quickly as possible. There are programs available that can help you pay off a portion of your student loans. You should make the necessary sacrifices to pay down this debt as quickly as possible. If you can double your student loan payments, you will be able to do the other things you want to much more quickly. Taking on freelance gigs or a second job can help you find the extra money you need to get out of debt.
The job market has changed. Baby boomers often went to work for one company for most of their careers. There was not a lot of job-hopping going on. Now, it is important to be on the lookout for new jobs at new companies. Often promotions and raises come from changing positions and companies. It is important to have your resume ready to go at all times and to be prepared to apply for a new job. The skillset is always changing, and you should work to stay on top of changing technology and to keep your skills updated. You may even consider working as an independent contractor or going into business for yourself.
Saving money should be a priority for millennials. There are a number of reasons to save money. An emergency fund is a necessity that can help you through difficult economic times. A fully-funded emergency fund can help if you are laid off. It can also help with unexpected expenses like medical emergencies. Additionally, saving up a down payment for a house can help you purchase a better home in an area where you are happy to stay for a longer amount of time. Saving up and paying cash to accomplish your goals will also help you do the things you dream of like a vacation to Europe or opening your own business. Once you are out of debt work to save aggressively so that you can accomplish these goals.
Stop Using Credit Cards
Depending on your credit cards is a bad habit that can bankrupt you financially. It does more than affect your credit score. It can take away opportunities that you may otherwise have if you did not need to make decisions based on whether or not you can meet your monthly obligations. Being debt-free, especially of consumer debt, opens so many doors and possibilities. Stop using your credit cards today. Then focus on getting out of debt. The sooner you can do this the more opportunities you will have in the future. Consumer debt can quickly add up and if you max out your cards, it can be difficult to make ends meet.
Master Your Budget
Finally, the most important thing you can do is to take control by mastering your budget. Your budget can help you reach all of your goals. Many people who are struggling right now and are worried about retirement never really mastered budgeting. Too often they lived from paycheck to paycheck and had a difficult time dealing with unexpected expenses. A budget gives you the power to stop doing that. Take the time to really start budgeting today.