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There’s no better time than the present to get your personal finances in order. The shimmer of any New Year’s resolutions often begins to dull by the time February rolls around. So maybe you didn’t get to the gym every day in January. But all is not lost. If any of your goals for 2018 is financially driven, we’ve got six tips to help keep you on track for achieving this very worthwhile goal. And if you’re a millennial, these tips will be especially helpful.
Save for Retirement, Starting Now
For those millennials who are just getting started in their first career jobs, it’s important to start saving for retirement from day one. Retirement might seem like it’s a long way away, but it will be here before you know it.
The benefit of starting to save for retirement at an early age is that you have to save less yourself and can rely more on compound interest earnings to fund your retirement. Plus, depending on where you begin working after college, your employer may offer a matching investment based on the amount you put into your retirement savings account with each paycheck. Many employers offer a dollar-for-dollar match for the first 3–6% of pre-tax earnings that you contribute to your 401(k). So it’s definitely worth it to get as much of that free money as possible, starting as soon as possible.
Pay Yourself First
Not only is it wise to start saving for retirement, but it’s beneficial to have a general savings account as well. Many of life’s big events are expensive. And if you’re a millennial, they may still be on your horizon. The average cost estimations of weddings and raising a child are at all-time highs. Plus, buying a first home or even relocating for a new job can be costly. It’s vital that you build good savings habits so you’re financially prepared for anything that might come your way. One way to do this is to pay yourself first. You can manually transfer money from your checking account to your savings account each time you get paid, or if you get paid on a regular schedule, you can set up an automatic transfer, which is a great way to build your savings habit. Now the trick is to “forget” it’s there so you don’t spend it unless you really need it for an emergency or a planned purchase.
Give us a call or stop by your local financial center anytime to chat with a Personal Financial Representative and learn more.
Spend Less than You Earn
This might seem like stating the obvious, but many people can get themselves into trouble, simply by not knowing very well exactly how much money they have coming in and going out every month. Although it may feel like you’re earning more than you could ever spend, it’s important to know the numbers exactly. Monitor your account activity closely. This is the best way to ensure you have a strong understanding of your spending habits. You can track your spending with an app, use pre-paid cards, or try the cash envelope system. Either way, this is an excellent way to build wealth because you can learn to control spending and allocate certain parts of your income to savings or debt repayment.
Set up a Budget and Stick to It
One of the easiest ways to plan for the future is to set up a budget. Creating your first budget is really quite simple. You just need to look back at your spending, create spending categories, and allocate certain amounts of your income to each category, making sure there is enough money to save too when you get your paycheck. The trick is not to set it and forget it. Sticking to a budget can take some adjustments and requires regular, consistent time and attention. Don’t give up if your first budget doesn’t work out 100% as planned the first time. Sometimes it takes a few months to get it just right.
Pay off Your Student Loans
If you’re one of the millions of Americans who graduated with student loans, you’ll need to think about paying off that debt. Although student loans can obviously be a huge help (for some, making a higher education possible) it is still debt that must be paid off. And that can be a burden. Obviously, sooner is better than later so you can avoid paying too much extra in interest costs over the years. The benefit of paying off student debt quickly is that you will have more money to allocate to your short-term and long-term savings goals. Once you don’t have hundreds of dollars in payments, you’ll create much more room in your budget. Plus, being debt-free really does allow you to pursue other life goals faster.
Don’t Forget About Insurance
If your employer doesn’t offer insurance or you really can’t make it work in your budget, you are still eligible to be covered on your parents’ insurance policy until age 26. If your parents have younger children to cover on the family policy too, it likely won’t cost them any extra to add you to their policy. This can be a good way to save a little extra money for a few years until you age out of this benefit. Plus, if you put those savings toward other things on this list, like building an emergency fund or a retirement account, you’ll be getting a good head start. And if you’re already older than 26, it’s still important to make sure you have health insurance. There are multiple options. Do your homework and pursue the one that’s right for you. Unexpected medical expenses can be very costly to those who risk being uninsured.
Stay on Track to Achieve Your Goals
Although it might be overwhelming, you can do it! These tips are a great way to start. And if you follow them, you’ll most likely be better equipped to afford the big events that will likely be coming your way in the years to come.