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7 Financial Tips for Millennials

| September 24, 2018
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While constantly reminding yourself to spend less and save more may seem like a simple strategy to reach your financial goals, this is much easier said than done. With that being said, I have compiled 7 easy tips to help reach your financial goals with as little stress (and as few major sacrifices) as possible.

Decide If Potential Purchases Coincide With Your Values, Major Life Goals, & Priorities

By first establishing your goals, it becomes easier to recognize which potential purchases are priorities- and which are not. Identifying what is most important to you in your life makes it easier to decide which aspects of your spending can be sacrificed and which are absolute essentials. Working towards your financial goals is a lot simpler once you’ve actually established what it is that you hope to achieve.

Automate All Payments to Resist Temptation to Spend Elsewhere

It can be extremely difficult to resist the temptation to spend any extra money that may seem to be just lying around in your bank account-- and consequently spend the money that should have been used towards rent or bills in the process. By automating all transactions from payments to investments, you are more likely to stick to your budget and avoid impulse expenditures.

According to Financial Advisor Eric Dean, "One of the biggest pitfalls I see young professionals and Millennials making is having a lack of automation in their overall plan. One of the biggest advantages of a 401k or other company retirement plan is the employee’s contributions are pulled before the money hits their paycheck. If Millennials began creating that same type of automation with their savings towards other aspects of their financial plan (cash reserves, debt, investment accounts, etc.) they would be a lot less likely to spend their money in places they probably shouldn’t, all without really threatening their ability to enjoy their social life”.

Start Planning for the Future Now- Don’t Wait for Life to Fall Into Place First

It can be tempting to put off taking the first steps of major financial planning, such as beginning your savings for buying a home, until other aspects of life, such as meeting the perfect partner, fall into place. It is important not to wait around for the “perfect” time, but to start as early as possible so you can be prepared for anything that life throws at you.

According to Financial Advisor Cassie Magro, “Saving for the future doesn’t cross the mind of many millennials because most people feel like it is so far away and that they will have adequate time to start saving. There are two things that happen here; the first is that life will get in the way and people don’t prioritize saving for the future until it is too late. The second is the missed opportunity of compound interest. By starting to save as early as possible, even if it is just a minimal amount at first, you will be able to capitalize on compounding that money for many years, in turn potentially allowing you to drastically increase your savings over time.”

Prioritize Paying Off Debt- And Stay Out Of It

Paying off student loans and working your way out of credit card debt should be top priorities in order to achieve your financial goals. Include a debt payoff plan in your monthly budget to avoid overspending and track your progression out of debt.

Advisor Ben Nathan adds: "Debt, especially credit card debt, can snowball quickly, with high interest rates that compound month after month. It's important to pay off these bad debts as soon as possible; good debt, like student loan debt, can be used as an important part of your overall financial plan. It's important to talk with a Financial Professional when dealing with multiple types of debt." 

Write Down Every Expenditure

By writing down each monthly expenditure and subtracting them from your monthly income, you will be better acquainted with exactly how much money you actually have. This makes it much simpler to create a realistic budget for yourself. Also, writing down each purchase before you make it will give you time to decide if it truly coincides with your goals and priorities- and give you a chance to change your mind and opt to save instead.

According to Advisor Aaron Witty,“With every client I sit down with, especially millennials who are only a few years in the workforce, I make sure to go through a detailed budget with them. This process involves writing down their expenses over the last month and more often than not there is an ‘ah ha’ moment to where their money is being spent once we put pen to paper. This simple step of writing down where they are spending money allows us to weed out the overspending and save more without changing their standard of living or lifestyle.”

Set Aside Emergency Savings

You never know what the future holds and it is important to be prepared for unexpected financial blows. An emergency savings account can turn a potential disaster into a minor inconvenience, as well as give you financial peace of mind during crises.

Financial Advisor Raz Bracha recommends: “Always keep 3 to 6 months of living expenses sitting in an interest-bearing savings account. This will be your cash reserve goal in preparation for unforeseen circumstances.”

Educate Yourself

It is easy to use your lack of extensive financial acumen as an excuse as to why you are not achieving your financial goals. By taking advantage of resources such as financial books, blogs, and podcasts, you will gain enough financial insight to begin to better your spending habits and help prevent future financial disasters from occurring. Additionally, Financial Advisors have the knowledge, training, experience, and objectivity needed to help you gain the understanding and know-how necessary for achieving your financial goals.

According to Financial Advisor Zac Rowe, “The more you know about personal finance, the easier it will be to take control of your own money. Start by spending your morning commute listening to an audio book rather than music. You can easily listen to two or three books a month using this strategy. Lastly, don’t be afraid to ask for help. Financial advisors are here to educate you, show you all your options, and make sure you’re heading in the right direction.”

The first step to saving money and becoming more financially savvy is deciding that you want to! With these tips, and a few (hopefully not too sacrificial) lifestyle changes, you can greatly improve your financial stability and start to work toward achieving the goals that you most desire out of life.

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