Most of the millennials out there are now in their 20s and 30s, just beginning their career climb and also the time when you’re making big financial decisions. These financial decisions can include home ownership, investment strategies, and family planning. Certainly, you want to try to avoid some of the financial risks that have been present 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” could put you in financial straits. Read below for some top financial tips that will help millennials make smart financial decisions.
Take money management courses online
Since most millennials are tech-savvy, I suggest signing up for courses in basic economics, accounting, and budgeting. These types of courses can be very affordable and very well delivered by the online professor. I feel this is a very effective way to update yourself on financial topics that may simplify and improve your financial life.
Build your retirement savings
Did you know that Wells Fargo revealed that nearly 50% of millennials don’t plan to retire? Make sure you participate in your employer’s 401(k) plan, even if you can only contribute the minimum each month.
List your entire financial picture
I advise you to make a list of everything that is spent each month. After absorbing this information, ask yourself this question. How will I pay for all this? There are also four basic things everyone should know about their finances: income, expenses, assets, and liabilities. A good understanding of these elements will help you understand your finances. There are many online tools that can help you link all your accounts – Mint, Quicken to name a few. I think this is your first step in improving your financial situation.
Look for passive income opportunities
Most of us work for money our entire lives and never actually use it to our advantage. It is possible to use your business income for passive income from your investments. For example, the IRS says passive income can come from two sources: rental property or a business in which you’re not actively involved. Make no mistake passive income is not about getting something for nothing. It takes a lot of work and is definitely not a “get rich quick” scheme.
Start a savings account
Open a participating account at your credit union even if you can’t make regular deposits. You can use this account to set aside additional funds for your short-term and even long-term goals. This can also be used as an emergency fund. Take advantage of 3-12 months’ worth of expenses, and avoid them in emergencies.
Pay yourself first
Once you have money in hand from your paycheck, IRS refund, etc., always pay yourself first. Arrange for automatic transfers from your checking account directly to your participating account every payday or on a monthly basis.
Do you know the impact of your credit score?
Everyone, especially the millennial generation of entrepreneurs, needs to 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 and check your credit report frequently.
Reduce your debt faster
Pay off smaller debts first and tackle larger debts gradually. This will allow you to see results and stay motivated.
Seek help from a trusted mentor
There is an abundance of information on the internet regarding financial literacy. However, choosing the brain of someone you know and trust is best. Their insights are often tailored to your specific needs.
Eliminate additional costs
It’s a proven fact that millennials have expensive habits ($5 latte every day, regular takeout, designer fashion, etc.). Keep a close eye on your expenses and cut back where you can.
Raise your children to be financially savvy
At this point, you may already have young children or plan to start 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. Hopefully, this will motivate them to keep saving their own money.
I hope you use these financial tips to keep your finances on track when you’re young. Remember, you have a very bright financial future ahead of you if you start now and stick with it!