Today, millennials make up 66% of the workforce of the US. Reportedly, the millennial generation or the Gen Y also faces some major financial challenges due to their student loans. With the financial situation being rigid, it is necessary for millennials to have a financial plan that can help them save money and effectively manage their debt. Here are some ways to achieve the same.
- Setup goals to be financially successful
It is important for millennials to set time-bound goals, which help them be financially stable. Most common goals are to own a car by 23 or to buy a house before you turn 35, etc. These goals motivate you to work harder. Financial goals should also systematic and planned. This can be done by sticking to a fixed budget. This will instil more savings and less expenditure. At the end of every month, you must have saved at least 10-20% of your post-tax income. There are various mobile applications and online tools that are available to help you keep a track of your savings.
- Using credit cards
There is a mixed perspective on whether one should use a credit card or not. Having a credit card is helpful in the long run, especially when you want to build a good credit history. This is fruitful in the future when your credit score is taken into consideration while applying for loans. It is also important to select the right credit card so that you do not end up paying more than what you can afford.
- Start saving for retirement
The right time to plan for retirement is now. With various retirement pension funds such as 401(k) plan available in the market, it is vital for millennials to look at it as a bright opportunity to invest. If you are just starting out, you should have a minimum of 7.5% of your income set aside for retirement planning
- Start investing
Investing early can be very beneficial in the long term. This aspect is lost to today’s millennials, especially if they are interested in investing in securities. To invest early means capitalizing on long-term savings and returns.
Studies have shown that most millennials avoid going to a professional financial advisor for advice on money management. However, taking advice or a second opinion is required nonetheless. To begin with, one can turn to family members or friends, who have some knowledge and experience with managing finances.