Millennials have grown up in a fast paced world full of technology with ever changing trends in media and business opportunities. They expect more when it comes to their careers and are learning that in order to get what they want they are going to have to work harder than ever. After all, they have thousands of seasoned professionals in front of them to compete for a job. Yet they are the first and currently only generation to have a job title such as professional blogger, app developer and YouTube star.
There are ample opportunities for making money and Millennials are finding ways to earn a living that fits their lifestyle. But they’re missing something in the midst of keeping up with everyday life: saving for their future.
Professional Financial Strategist, Shannah L. Compton asked two money smart professionals what they recommend Millennials do to ensure a more financially secured future. Aron Levine, head of Preferred Banking & Merrill Edge at Bank of America and Robert Kraft, Chief Operating Officer at SNN Incorporated all said to save as much money as possible, but elaborated further by giving four more important pieces of advice.
Start Saving Early
As Millennials, it can be especially tempting to use an entire paycheck on things you want that month, but you should be looking at the bigger picture. A portion of each paycheck should go into your savings. By having determined amounts put into your savings account automatically, you will learn how to spend without it.
Aron Levine pointed out, “The most important thing a Millennial can do right now to improve his or her financial future is to start saving. We know from the Fall 2014 Merrill Edge Report that 80 percent of Millennials think about their long-term finances when they are paying bills. But, when Millennials are paying bills every month, they should also make it a point to pay themselves. It’s important for Millennials to find a balance between ensuring that they pay off any debt, including student debt, while also starting to save for their future goals, including retirement.”
Levine also points out that life happens quickly and while saving may not feel like a priority now, it will soon. Millennials may not know what matters at this point in their lives, however, if they don’t start saving while they’re young, it may be a risky move for the future.
Invest, but Do it Smartly
Before you get ahead of yourself, there are a few things according to Finance Hub that you must cross off on your check list in order to be “ready” for investing. Make sure you’ve prepared a budget, establish good credit (and take the time to do so), set up an emergency fund and if you have debt, create a plan to get it under control. You want to have a few back up plans because while investing does have potential for highs, you don’t want to burn out on its lows.
Robert Kraft, COO of the financial news portal and publishing company, SNN Incorporated offered 5 tips and questions Millennials should think about before putting their money anywhere:
- How much money can I afford to lose?
- Determine how you can convert your interests into investment opportunities, start looking into online brokers
- Utilize the resources available to you.
- Create a portfolio and start following companies that pique your interest.
- Determine whether you want to find investment properties yourself or if you want to consult with a buy to let mortgage advisor first.
And according to Kraft, if Millennials subscribe to any newsletter, he recommends The Intelligent Investor by Benjamin Graham which resembles how “Darwin’s Origin of Species is to the theory of evolution; The Intelligent Investor is to the theory of value investing.”
Take Advantage of Unexpected Money
While it may be hard to not spend your entire annual bonus as a reward for all your hard work, try to resist the urge. Look at that money the same way you would with your usual paycheck. It will still need to be planned out and put into a budget.
“If you receive a significant influx in funds, such as lump-sum bonus, tax refund, or inheritance, avoid the temptation of spending frivolously and think about the long term. Consider saving or investing some, or even all, of the funds to put toward a financial goal, whether it be a big purchase or a more comfortable retirement,” Aron explained.
That bonus may be a great start to investing. A lot are saying real estate is the best investment. Go and see the mortgage rates for land here. Think of the unexpected money as an opportunity.
Budget, Budget, Budget
Creating a budget with help from finance experts from TK.no should be one of the first things you do when you establish an income. Millennials should understand this is the first step to creating and maintaining a solid financial foundation.
The experts interviewed couldn’t agree more with the importance of budgeting. Levine said, “Budgets are essential to estimate your monthly income and expenses. At the end of each month, Millennials should aim to see how their actual spending stacks up against their budget in case they need to make adjustments. Budgets also help to make sure you live within your means, and help easily plan for day-to-day spending activities such as entertainment, rent and eating out.”
Most important thing about creating a budget is sticking to it!
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