Millennials face unique financial challenges. They have accumulated more debt than previous generations and often need more emergency savings.
To overcome these hurdles, millennials need to develop effective money-saving strategies. This includes implementing budgets, prioritizing savings, and saving for big-ticket items. They also need to learn about the benefits of investing.
Set Specific Goals
Millennials have unique financial habits, goals and hurdles compared to their parents or grandparents. High student loan debt levels, rising living costs, and competing career aspirations exist.
Working with an advisor is important, as is planning on your own. Setting specific, measurable, and realistic financial goals will help you to achieve these. A budget aligned with your goals, including strategies to curb unnecessary spending, is essential.
A savings and investment strategy is another important goal. The financial planning Franklin Lakes NJ should also include a plan for paying down existing debts, like credit card balances or other high-interest loans, while allocating funds to savings and investments. It’s also a good idea to include a plan for protecting against financial losses through insurance coverage, such as health and life insurance.
Prioritize Your Debts
The first step in getting out of debt is figuring out which debts you have and how much you owe on each. Make a list and include the following:
- The amount owed.
- The minimum monthly payment is required.
- The interest rate of each debt.
Then, prioritize the debts according to their respective interest rates. This method, called “debt-avalanche,” saves money by paying off debts with the highest interest rates.
Once your debts are paid off, build an emergency savings fund. It is essential to have at least six months of living expenses saved to cover unforeseen circumstances like job loss or medical emergencies. It also helps to keep in a tax-advantaged account (like your 401(k) or IRA).
Create a Budget
The best way to know whether you’re on track to achieve your financial freedom goal is by creating a budget and tracking your spending. A tool like Mint can help you keep tabs on your spending and debt to make it easier to set realistic goals.
Millennials often struggle with high living costs and towering student loan debt, but they also have a lot of opportunities to save for their dream home, start their own business or further their career. Creating a budget is key to avoiding costly mistakes and can help you make the life you want.
Setting aside money for retirement, college savings and emergency expenses is important. You can also save for big-ticket items by purchasing things on sale and limiting discretionary purchases.
Save for Big-Ticket Items
When saving for big-ticket items, planning can help. It’s not just about ensuring that all of the non-negotiable things are accounted for in your budget, like retirement savings, paying down debt and more; it’s also about minimizing the strain that can come with these larger purchases.
To start saving for a large purchase, it’s important to name your goal and estimate how much it will cost. Once you know this number, divide it by the number of paydays until your planned purchase and then put this amount aside each paycheck.
Financial planners specializing in millennials can help you establish and track these savings goals. They can also assist you with negotiating lower prices and identifying possible ways to reduce the total cost of a specific item.
Create a Retirement Plan
Developing a financial plan at the beginning of each year provides discipline, structure, safety and peace of mind. Whether you’re just starting or nearing retirement, having a financial plan will help you stay on track to reach your goals.
Millennials are saving for their first homes, building businesses and growing families. It’s important to find a financial advisor who understands the unique challenges of these life changes.
A financial advisor who works with millennials can provide a fresh perspective that can improve your overall outlook. You can use a free tool to connect with vetted advisor matches in your area who can discuss your situation and create a strategy. The matching process is free and has no obligation.