Most millennials are now in their 20s to 30s, starting their career climb and also the time when you are making major financial decisions. These financial decisions can include home ownership, investment strategies, and family planning. Surely you want to try to avoid some of the financial risks that have occurred in the lives of previous generations.
Financial literacy is rarely taught in school, so if you didn’t learn it at home growing up, your first time in the “real world” can put you in some financial distress. Read below to discover some of the best financial tips that will help millennials make smart financial decisions.
Take money management courses online
Because most millennials are good at tech, I would suggest enrolling in basic economics, accounting, and budgeting classes. These types of lessons can be very affordable and taught very well by the online teacher. I think this is a very effective way to update yourself on financial topics that can simplify and improve your financial life.
Build up your retirement savings
Did you know Wells Fargo revealed that almost 50% of millennials aren’t planning for retirement? Make sure you participate in your employer’s 401 (k) plan, even if you can only afford to contribute the minimum each month.
Make a list of your entire financial situation
I recommend that you make a list of everything that is spent each month. After digesting this information, ask yourself this question. How am I going to pay for all of this? There are also four essential things everyone should know about their finances: income, expenses, assets and liabilities. Having a good understanding of these elements will help you make sense of your finances. There are many tools online that can help you connect all of your accounts – Mint, Quicken to name a few. I believe this is your first step in improving your finances.
Look for passive income opportunities
Most of us work for money our entire lives and never really put it to good use for us. It is possible to use the income from your labor for passive income from your investments. For example, the IRS says passive income can come from two sources: a rental property or a business in which you are not actively involved. Don’t make mistakes; passive income is not about getting something for nothing. It involves a lot of work and is definitely not a get-rich-quick scheme.
Open a savings account
Open a stock account in your caisse, even if you can’t make regular deposits. You can use this account to put money aside for your short term and even long term goals. This can also be used as an emergency fund. Shoot for 3-12 months of spending, set aside for emergencies.
Pay yourself first
Once you have money on hand from your paycheck, IRS refund, etc., always pay yourself first. Arrange automatic transfers from your checking account directly to your stock account every payday or on a monthly basis.
Do you know the impact of your credit score?
Everyone, but especially millennial entrepreneurs, should understand that their personal credit can be the determining factor in obtaining working capital in the future. Getting approved for a loan can be very difficult when your credit score is low. Learn how to read your credit report and check it frequently.
Reduce your debt faster
Pay off small debts first and gradually tackle larger ones. This will allow you to see results and stay motivated.
Call on a trusted mentor
There is an overabundance of information online regarding financial literacy. However, it is best to choose the brain of someone you know and trust. Their ideas are often tailored to your specific needs.
Remove additional costs
It’s a proven fact that millennials have expensive habits (5 lattes a day, regular dining out, designer clothes, etc.). Keep a close eye on your expenses and cut them where you can.
Raising Your Children To Be Financially Savvy
At this point, you may already have young children or are considering starting a family. Teach them that saving money is essential. When they are old enough, take them to your credit union and help them open their own accounts. This will hopefully inspire them to continue saving their own money.
Hope you use these financial tips to keep your finances on track while you are young. Remember, you have a very bright financial future ahead of you if you start now and stick to it!