Oh, to be young! For many millennials, the opportunity to achieve financial nirvana is at hand. The Great Wealth Transfer from Baby Boomers to the next generations has begun, with an estimated $41 trillion or more to change hands.
If you are one of the fortunate ones to be on the receiving end of the largess, hooray! But, if you’re like most Americans, you’ll be working hard for your money. Let’s explore how you can make the most of your money and enjoy the fruits of your labor in the long run.
6 Easy Steps for Financial Success
Make big moves toward your financial goals with these six steps.
1. Save, save, save!
Follow the cardinal rule of saving at least 10% of your income and build up a savings or emergency fund. It is recommended that you have about three months of living expenses in savings put aside for the just-in-case.
2. Cut down on living costs.
If you live at home and are fortunate enough not to have to pay rent, act like you are and put the money into savings. If you’re renting an apartment, get a roomy and split the costs of rent, utilities and food. While it’s a luxury to have your own place, saving on housing early will allow you to save for a down payment for when you’re out on your own someday.
3. Take advantage of employer retirement plans if available.
Auto save a percentage of your income each month at least up to your employer match which is between 3-6%. We can’t stress it enough – the key to financial success is saving early and saving aggressively while young. But don’t stop there – increase the amount you contribute to saving every year. If your employer doesn’t offer retirement savings options, open a Roth IRA.
4. Open a Roth IRA.
If you have money saved, and you are participating in your employer’s plan, then open a Roth IRA and start to put a monthly amount in. Start with what you can and increase it as you go. Open a Roth IRA and just start saving.
5. Use credit cards wisely – and pay your balance off monthly.
Build a solid credit history worth bragging about. Sure, carry a major credit card, but avoid individual store or merchant cards that tend to impose very high interest rates. They can be tempting particularly when paired with an incentive such as immediate discount on purchases. Plus, you don’t want to get credit-happy and end up in massive debt.
However, because each card you carry increases the amount of credit you can access, having multiple cards can lower your credit score. Yup…it’s a dastardly plot.
Books like The Financial Wisdom of Ebenezer Scrooge, by Ted Klontz and Wild Money by Luna Jaffe. These are quick reads, full of great tips and can help you understand your relationship with money. You’d be surprised how eye opening, and liberating, that can be!
Protect Your Future
Are you ready to create a long-term financial plan that works for all your what-ifs? Click here to connect with the Clarity Wealth Development team today.