Millennials, those born roughly between 1980 and the year 2000, face a different
future than Baby Boomers did at their same age. In terms of wealth building and
saving for retirement their challenges are wage stagnation, unemployment,
underemployment and a seeming sense of entitlement. Because they came of age
during the Great Recession, their faith in brokerage firms, Wall Street and
global banks has been bruised.
Being optimists, we believe that the financial future of this generation can
still be bright, but with loads of student debt and lack of investment
understanding they need to get started
finances and money management now.
Time is on your side and is your greatest asset
One thing Millennials have today that Boomers don’t is
stretches of time
before retirement. It is their greatest resource and this fact needs to be made
clear to them. Time cannot be replaced, and if you are a Millennial, then
knowing about the power of compounding will change your financial life.
$10,000 – the cost of a used car – invested today in the S&P 500 Index and based
on market historical returns, from 1950 to the end of 2017 could grow to $1,000,000 or more throughout your
career, thus building a solid foundation for your retirement needs. This return
is without adding another dollar to your investment.
S&P Market Return Chart
If you do
nothing else for your retirement, scrape and scrap to make this investment into
SPY (S&P 500 Index ETF) or VTI (Vanguard Total Stock Market ETF) and you will be
handsomely rewarded since you have this time on your side.
Just get started
A new investor with limited funds can utilize an online, no-frills brokerage
account and depending on which brokerage you pick, you can open an account with
less than $1,000. Not every house requires initial investments of more than
$2,500, and as of this writing, Fidelity is offering a no minimum to opening an
Just get started and dollar cost average into your account making monthly
deposits into your investments no matter rain or shine. Persistence will pay off
pay yourself first, before any other bills.
Another place to set aside money is with an Employer-matched 401k. Take
advantage of this because if your company matches or contributes to your account
it is like receiving free money, and it’s unwise to leave it on the table. If
you can save a minimum of 10 percent of your pre-tax paycheck and begin this
right away, you will never notice the difference in your take home pay.
Remember, pay yourself first!
Make it easy on yourself and automate these savings through payroll deductions.
This way you won’t have to remember to take the money out, be tempted to forgo a
payment to yourself and spending it elsewhere.
Pay down your debt
Nothing can derail your financial future more than maintaining debt. Pay it down
or eliminate it. If you have high-interest credit card debt, reduce this first,
then you can
refinance your student loans and prioritize your debt payments. Get
yourself on a savings plan alongside paying down your bills. Remember? Who are
you going to pay first?
Track your spending
In order to pay down your debt and save for your future, you must know where
your money is going.
your spending is a powerful tool to put YOU in
control of your finances. Write down everything you spend and put it into a
category. Keep a running daily, monthly and yearly average. Manage these figures
rigorously. Even small changes like deciding not to purchase lattes or going out
to lunch on a daily basis or forgoing the latest tech toy can save you hundreds
- even thousands - of dollars per year. You might not know this fact if it
weren’t for you tracking your expenditures. Do you know how much your average
spending per day is?
At your fingertips
Information is everywhere online these days for your self-education.
worksheets, sample budgets and even online courses are all there
for you. Learn the language of financial terms and arm yourself with knowledge
so you will not be taken advantage of by financial professionals. Only you have
your best interest in mind when it comes to your financial future.
Build your future
What is better than
the securities market for investing? The stock market has
averaged returns well above inflation for years.
When we retired in 1991 the S&P 500 Index closed at 312.49. Today it is much
higher and in those twenty-eight years the Index has averaged over 10% including dividends, which is about the norm and this is including the 2008 crash plus a
So while as a Millennial you might feel you have
circumstances which justify why you’re not building for your financial future, move past this
obstruction. We all have had obstacles to overcome in life. Instead, take
advantage of these life-changing money tips and get started today. Your financial future is dependent