By: Jovan Johnson MBA, CFP®, CPA/PFS

America’s millennial generation, adults between ages 23 to 38 in 2019, includes approximately 72.1 million individuals. Millennials have recently become the largest generation in the United States. Also, this generation is expected to inherit over 68 trillion from their baby boomer parents by the year 2030. This will represent one of the largest wealth transfers in the modern times, which is why it is key for millennials to learn great financial management skills now.

As a millennial, it is important to understand that time is still on your side. You can use this time to your advantage when planning your finances. The sooner you start on your wealth building journey, the better off you will be. You will have to save and invest a much larger portion of your income the longer that you wait to get started.

Here are ten tips to help give you the confidence and clarity to begin your wealth building journey:

1. Create and stick to a budget

Know where your money is coming from and going to. To start pursuing your financial goals, you will need to get a handle on your money. Remember that you are in control, so do not let your money control you. There are many great tools and apps that can assist you with creating a great budget such as YNAB (You Need A Budget) or Mint.

2. Save For An Emergency Fund (3-6 Months)

It is important to proactively plan for emergencies by building up an emergency fund. A rule of thumb is to save 3 to 6 months of your non-discretionary expenses. Things happen, even if you are young! Also, consider saving your emergency fund in a high-yield savings account, which will allow you to earn a higher interest rate than most traditional bank savings accounts.

3. Take Advantage Of Any Employer-Match

Your employer may have paused their match during this time, but once it is resumed make sure you take advantage of it. This can be seen as “free” money. Also, remember that this is actually a part of your compensation package when you accept the job.

4. Cover Yourself And Your Assets

If you have children or any other dependents, it is essential to create an estate plan. It does not have to be complex, but you should definitely put some thought into it. Also, consider term life insurance while you build assets. Term life insurance is fairly inexpensive, especially since you are still young. Some other insurance coverages to consider are disability, auto, and homeowners/renters. All of these things will ensure that your family is taken care of if something happens to you.

5. Start Investing Now

You have the one thing that older generations wish they had: time. Therefore, you should use this to your advantage, especially when it comes to investing. Research shows that the sooner you begin investing and saving for retirement the more money you will have during retirement. This is because you will have compound interest on your side. Let the interest on your investments do most of the growth work for you.

6. Create A Debt Payoff Plan

To begin the process, take a comprehensive look at all of your debt and organize it based on your preferred debt payoff method. The two most popular ways to pay off debt are the snowball method and avalanche method. The key is to take it one step at a time. Living with debt means you may temporarily have to delay some of your other financial goals.

7. Check Your Credit Report At Least Annually

You are able to check your credit report here: https://www.annualcreditreport.com/index.action

It is very important to check your credit report frequently, especially during this time. By checking it frequently, you can be proactive with detecting any fraud or errors. Due to COVID-19, the big three credit bureaus, Equifax, Experian, and TransUnion, are now offering free weekly online reports through April 2021. 

8. Create Multiple Streams of Income

In today’s world, it is beneficial to create multiple streams of income. This will place you on the fast track to financial freedom and independence. Having multiple sources of income can provide you with both the flexibility to do more of the things you love and diversification to help you weather economic downturns.

9. Hire A Financial Adviser, Preferably A CERTIFIED FINANCIAL PLANNER™

At some point along your wealth building journey, you will become very busy with your career. This is where you can truly benefit from having professional advice. You may also be going through a significant life transition such as: having a baby, purchasing a home, moving to a new state, etc. All of these situations may call for financial guidance.

10. Do Not Always Go After the Shiny Object When Investing

You may have heard from some of your peers a statement similar to this one: Man, I just hopped on this FOREX thing and I’m making a killing. Or they may brag about making a killing by purchasing the “magic stock”. Before investing in anything, it is key to do your due diligence and research. If you decide to experiment with risky investments, make sure it is with money you can afford to lose.

Key Takeaways

Getting started and sticking to a plan will make the biggest difference in your financial life. You have to be intentional with your financial goals.

By using the tips listed above, you’ll be well on your way to a successful financial journey that will pay off for you and your family.

And you can’t put a price on that.

 

Disclosures

None of the information provided is intended as investment, tax, accounting or legal advice, as an offer or solicitation of an offer to buy or sell, or as an endorsement, of any company, security, fund, or other securities or non-securities offering. The information should not be relied upon for purposes of transacting securities or other investments. Your use of the information is at your sole risk. The content is provided ‘as is’ and without warranties, either expressed or implied. Piece of Wealth Planning, LLC does not promise or guarantee any income or particular result from your use of the information contained herein.