7 Essential Money Moves Millennials Shouldn’t Put Off
Millennials tend to have less financial stability than the generations before them. Generally speaking, they have low credit scores and high debts from student loans and credit cards.
Fortunately, time is on their side -- with several decades separating them from retirement, there are many things millennials can do now to turn their financial lives around. Explore the tips below to see how to set yourself up for financial success.
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1. Create a Budget and Stick to It
If you want to save money, you need to be sure you aren't spending more than you make. How can you do that? A budget.
By using a budget, you'll see where you might be overspending, making it that much easier to stop. Check your budget every month to make sure you're staying on track.
2. Build Credit
Although many millennials already have a credit card, some might be hesitant to open one because they don't want the opportunity to incur credit card debt. However, it's important to start building credit as part of a long-term financial life plan.
"I always recommend people in their early twenties, at a minimum, open a credit card," said James M. Comblo, chief executive officer and president at FSC Wealth Advisors. "If you charge a tank of gas to that card each month and pay it off in full, your credit will begin to build rapidly."
3. Pay Down High-Interest Debt
Because credit card debt tends to have a higher interest rate than other debts, you will want a solution for paying it down. Millennials should consider taking out a personal loan as a debt repayment strategy. Of course, this only makes sense if the new loan has a meaningfully lower APR and no hidden fees.
4. Open a Savings Account and Build an Emergency Fund
If you don't already have a savings account, you should open one. If you do have one that's been lying dormant, start contributing to it regularly.
"Saving just $25 a week can make a difference," said Katharine Perry, a certified financial planner with Fort Pitt Capital Group. "Anything is better than nothing, and $25 a week is $1,200 a year. That's a good start, and it's really a way to help yourself. The sooner you start, the better your chances of developing the good habit of saving and succeeding."
In addition, many experts recommend having three to six months' worth of expenses in an emergency fund. Being prepared in this way will help you stay on track with your financial goals.
5. Start Investing as Early as Possible
Investing is the top thing millennials should do if they want to be financially secure down the line, said Shaun Melby, CFP, a registered investment advisor and founder of Melby Wealth Management.
"Even if it's as little as $50 per month, just start," he said. "Depending on their age, [a millennial] could have 30 to 40 years of compounding interest to benefit their portfolios before they retire. Six thousand dollars invested every year for 40 years at an 8% annual average return would result in a portfolio balance of $1.86 million. Time is on our side -- by starting now, millennials can really have something to show for it when they retire."
6. Contribute Enough Money To Get Your Employer’s 401(k) Match
If you're lucky enough to have a 401(k) at your job where your employer matches, contribute at least the amount to get the full amount of your employer's match. Then when you get bonuses or raises, contribute a little more to keep that account growing.
Contributing regularly to retirement accounts is an essential part of planning for the future.
7. Automate Savings and Investing
To ensure you're meeting your savings and investing goals, make your contributions automatic. Whether some of your paycheck goes straight into your 401(k) or if you set a monthly transfer from your checking account to your savings account, you won't miss the money as much if you never really had it.
By automating, you don't have to remind yourself to do these things, which means you won't forget to save.
This article was provided by MoneyLion.com for informational purposes only and should not be construed as financial, legal or tax advice.
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