Millennials have become adults in a very interesting time: in our years, one could argue we have seen more than our fair share of economic upticks and downturns. Having been fortunate enough to grow up in a time where information is readily available (thanks, Internet), I’m sure that most of us are already familiar with this roller coaster of economic stability.
Many of you were probably like me: put huge amounts of time and effort into your schooling to receive that coveted college degree and stepped out into the world to take on its challenges, only to find yourself stuck in the middle of a recession with high unemployment rates. That “dream job” that was supposed to be waiting for you at the other end of that collegiate career is not there for the taking. You find yourself searching a lot longer than you expected to in order to get started down your path to financial security.
When you finally get yourself a solid job and steady income, it’s easy to want to put that money toward immediate rewards that you worked your butt off for. Planning ahead for the future might slip into the backseat. “Europe and that 4K TV have already waited long enough. Retirement is such a long ways away. I’ll get to that eventually.”
Cue the meme of Kim Kardashian rolling her eyes.
Financial planning and strategy are just as, if not more, important to our generation than it was to those who preceded us. Unless we have a solid playbook of how to get to where we want to be financially, it is frighteningly easy to not make it there. Please thoughtfully consider some of the following tips to help set yourself up for financial success.
All achievements are met by first considering what you want to accomplish. Money is a tool and if you use it correctly it can get you to where you want to be. Is your goal to be able to set enough aside to start your own business five or ten years down the road? Maybe your heart’s desire is to retire at 55 and see the world? Maybe even take some trips before then? Make sure you understand where you want to be.
Understanding your goal is vital to do now for one simple reason: time. With the oldest millennials being in their early 30s, we have plenty of time until we reach the age where we are no longer able (or willing) to work. Plenty of money can be made in various forms during this time. Salaries, benefits and investments can strongly contribute to your comfort later in life.
With time on our side, one would be wise to set up a retirement plan. Are you familiar with the term “compound interest”? If not, make sure you give it a quick look online. Setting up a 401K (offered through many employers), traditional or Roth IRAs, or annuity can take your money and multiply it many times over. Each one comes with its own benefits and restrictions, so make sure you research which plan is best for your interests. You’d be amazed at how just putting in small amounts now can become huge sums later.
Budgeting. To many, just hearing the word is enough to make them cringe as if they just jabbed their toe. Fewer have the willpower to stick to one, but those that do reap the benefits. I myself have found that this is not only a great tool for setting up long-term goals but short term ones as well. Maybe Europe doesn’t have to be so far away. Setting aside a bit of money each paycheck instead of, say, going out to eat 7 nights a week, will make vacations and larger purchases achievable without sacrificing your future financial safety net.
This is all assuming the road ahead is straightforward, but life tends to steer you in different directions. All it could take is one bad car accident or losing your partner to make it so you are no longer able to earn the living you were. There is one form of financial planning that not many people our age take seriously: life insurance. With death feeling so far off, it’s natural to not consider planning for it. Life can unfortunately be disastrous at times, and the last thing we want to do is leave our loved ones in a position of not only mourning, but financial difficulty. Life insurance can help to alleviate the pressures and stresses that a family suffers through during a death.
I hope you were able to get something valuable from what you have read here. We have many challenges in front of us, but I feel we are more than up to the task. By following through and applying smart and strategic financial planning, we will be able to make sure that money isn’t something we’ll have to worry about throughout our lives.
Blog written by: Andrew Jordan, Accountant for Sentinel Security Life Insurance Co.