Millennial Money Tips

Save for Retirement/Match Employer 401k Contribution

The effects of compounding growth and investing in your retirement at a young age are tremendous! They are undoubtedly one of the way to setup young adults for success. Ask any financial advisor! If you can afford to save and invest when your 20 as opposed to when your 30, you will be that much more ahead of your peers. Your nest egg will be that much more significant in the long term and your extremely like to be on the path to becoming a “401k millionaire”. Moreover, taking advantage of any applicable employer match is always advised whenever possible. If you are not taking advantage of an employer match, you are essentially not taking advantage of free money for your retirement.

Assess the Value of a Dollar Today vs. Tomorrow

It's important that Americans talk about finances with their family at a young age. This will in turn help bolster up the knowledge of younger generations so they aren't left financially lost. This is one of the biggest mistakes many young adults make. When you’re in your twenties it’s crucial you understand and adopt “financial sense” that appropriately assesses the value of a dollar now vs. the value of a dollar down the road. A good question to help you gain a better grasp on this idea is: “Would you rather have $1,000 today or $250 a year for the next 20 years?”. $1 today is worth more than $1 next week (we all understand this, time is money after all) but to what degree are you weighing the short term vs. the long term? If you would rather receive $1,000 now as opposed to the residual over 20 years, you are focused too much on the short term! This also highly corresponds to debt. If you are paying 16% interest on a credit card or personal loan and you have a substantial amount of funds in savings (earning a meager 1% APY) use those funds to pay down debt! Always evaluate the opportunity cost of your money, so that you can make it work best for you and allocate your money to what saves you the most.

Have a Clearly Defined Budget

It’s extremely important to make a habit of budgeting in your 20s. Financial literacy has a been a tool that was often left neglected until students joined the work force, however that appears to be changing for the better now! It’s really important to adapt these habits early on so that you can prepare for life and achieve all your goals later down the line. Spending without knowing your budget is a sure-fire way to rack up debt and can lead to a slippery financial slope. You can’t possibly know how to “spend within your budget” if you don’t know what your budget is. This is why it's also recommended you use a monthly budget calculator

Frivolous Spending and Avoid Borrowing More Than You Make

We all make mistakes when we’re young and this is to be expected, nobody is perfect. However, it’s really important to set responsible financial habits when you’re young. Never spend more than you make and try to avoid making charges to a credit card for vacations, if you don't have the money at your disposal. The key here is to live “within your means”. Borrowing more than you need is never a good idea, but it's unfortunately something that can happen. Try to avoid taking out persona loans for unnecessary purchases

Take the time to learn about good financial habits and make sure you set financial goals! Goals and habits help keep us grounded so that we can stick to our game plan!