Top 10 Crucial Financial Strategies for Millennials
There are many advantages to being in your 20s and early 30s. You can build a foundation to ensure your financial success for a lifetime. The decisions you make now have a tremendous amount of influence over your future. Make the effort to ensure that you’re making wise choices.
The earlier you can take advantage of these strategies, the better!
These moves will determine your financial future:
1. Create an emergency fund. It only takes one minor financial catastrophe to affect your finances for many years. A $1,000 car repair can cause more challenges than you think. You might have to max out your credit card, which negatively affects your credit score. The additional monthly payment can make it difficult to pay your other payments or to save.
· Save 3-6 months of living expenses, and you’ll be able to handle nearly anything.
2. Begin saving for retirement. Time really is on your side. You don’t have to save much each month if you get started early enough.
3. Build a positive credit history. When you purchase a car, home, or receive any other type of conventional financing, your credit history is important. Your credit score can affect many other things, including purchasing a cell phone plan, your insurance rates, or getting a job.
4. Avoid debt. Dealing with debt is akin to climbing a mountain with rocks in your backpack. Avoid purchasing items you can’t afford without using a credit card. Few stresses match the feeling of being in debt. It doesn’t take long to find yourself with more debt than you thought possible, preventing you from being able to save toward your goals, and compromising your quality of life.
5. Consider a used car. A new car may seem more attractive, but new cars are considerably more expensive than those just a few years old. Remember to avoid taking on too much debt so that you have money for your savings goals.
6. Start a second income. One of the best ways to ensure that you always have enough income is to have more than one income stream. It could be a second job or a small online business. Remember to save some of it!
7. Get insured. Protect yourself and your possessions. At the very least, have health insurance to protect against catastrophic medical bills. Other types of insurance like pet insurance may also apply. Contact an insurance professional to review your options.
8. Take advantage of your employer. Most employers offer valuable benefits. Ensure you’re taking advantage of them. These can include life insurance, savings plans, 401(k) matching, and a host of other benefits.
· Read your employee handbook and talk to your HR department to understand how your benefits work, and what you might be missing out on that you didn’t know was available.
9. Consider waiting to start a family until you’re financially stable. Getting married is easy, but failure to save can create many financial challenges, especially if you have kids. Children are expensive. There’s no hurry. Make a wise decision.
10. Calculate your net worth. Your net worth is the total value of your assets - your accounts, car, home, and personal property, minus the total value of everything you owe – student loans, car loans, mortgage, credit card debt, etc. It’s like a financial report card. Redo the calculation annually or any time there is a change in your life like a new job.
Right now, you’re in perhaps the most influential period of your financial life. Any mistakes can potentially affect your financial future for decades. Getting off to a good start is the best way to ensure a positive financial future. You also have tremendous financial freedom. Use that freedom to build a strong financial foundation.