As a millennial, you're part of a unique and special generation. You're probably at the exciting stage in life where you're just starting out, or you're beginning that career climb. Undoubtedly you want to avoid some of the financial pitfalls that have befallen previous generations, but how can you do so? Read below to learn the top 10 financial tips for millennials today.
Build Up Your Retirement Savings
A recent study shows that 45% of millennials weren't planning for retirement, but that doesn't mean you can't start now. Take part in your employer's 401(k) plan, even if you can only afford to contribute the minimum. You can build your contributions as you advance your career. A 401(k) makes this easy by taking money out pre-tax; your plan may even match your contribution. Don’t miss out on free money.
Start a Savings Account
Open a savings account, even if you can't contribute much right now. You can use the savings account to put money aside for short-term and even long-term goals. For example, you can fund your holiday buying or deposit on a new car with your savings account. You’d be surprised how fast your savings balance will grow if you save a little each month throughout the year.
Pay Yourself First
Arrange for direct deposit or automatic transfers from your checking account directly to your savings or retirement account every payday. See it as paying for long-term needs or unexpected expenses.
Get Aggressive with Your Debt
Consider using the snowball method -- paying small debts off first and gradually tackling the larger ones -- to put your debt behind you. This will allow you to see results, stay motivated, and free up funds to increase your saving contributions.
Incur New Debt Only When It's Unavoidable
While it may seem easy to take on new debt, paying it off won't be quite as easy. Make sure that you only take on additional debt if you absolutely have to.
Build an Emergency Fund
One of the most important financial tips is to build an emergency fund. Shoot for 3-12 months of expenses, put aside for absolute emergencies. This money should be in its own account, separate from your savings. If you need to, start small and work your way up -- the important thing is to get started now.
Cut Out Extra Costs
Many millennials have expensive habits -- for example $5 lattes, or $15 lunches every day. Keep track of every one of your expenses to see where you can trim some money. Consider areas that you may not have thought of, like raising your car insurance deductible.
Treat Your Raises Right
As you move up in your career, it's important to manage your raises properly. If you get a raise, arrange to save half (or use it to pay down debt.) The other half, you can allocate to the things you want and need in the future.
Raise Your Children to Be Savvy About Money
If you have young children or are planning to, start them off in life right by teaching them that saving money is a necessity, not an option. Take them to your local bank and have them open up their own savings account. Help them feel involved and excited about saving.
Plan For Your Family's Future
While you're still young, you're old enough to think about life insurance. Typically, the younger you are, the healthier you are, and the lower the rates will be on insurance premiums. A term life insurance policy can be quite affordable and can allow your family to have long term security in the event of your untimely death.
Use the simple financial tips described above to get your finances on track while you're still young. You've got a bright future ahead that can include financial health and well-being if you start now and stick with it!