Millennials. You've grown up in an ever-changing world of technology, pop culture and reality TV. Ask any other generation, and their list of career options wouldn't include professional blogger, mobile app creator or YouTube star.
You've seen the stock market fall apart in 2009, and as a result you are competing with older candidates who have 10 times the amount of work experience than you. It's a jungle out there.
Where there is a con, there is always a pro. What you do have is easy access to mounds of information at your fingertips. You can learn from the past in ways that weren't available even a few years ago. You can turn money mishaps that your parents might have made into money victories for yourself. But first, you've got to get money smart.
I poised the question, "What did you wish you had known about money in your 20s," to several smart people, including Aron Levine, the head of Preferred Banking & Merrill Edge at Bank of America and Robert Kraft, Chief Operating Officer at SNN Incorporated. The number one answer to the question was to start SAVING.
Start Saving Early
Don't think savings is a big deal? Ask anyone who is running their own business, decided to retire early or abandoned their old job to go after their dream career. Savings was their saving grace, no pun intended.
As 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."
"Life happens quickly, so it's important to start saving early. The reality is that making retirement a priority among many competing financial needs can be difficult, especially when trying to balance various everyday expenses. One way to start making saving and investing easy on yourself is to go through your employer-sponsored retirement plan, such as a 401(k) or 403(b) account, or set up an automatic transfer from your bank or brokerage account into your personal IRA, Simplified Employee Pension (SEP-IRA) or SIMPLE IRA," says Aron.
Joel Hollenbeck, who is the Director of Institutional/Enterprise Learning Solutions at John Wiley & Sons agrees that savings plays a starring role in your financial future. "Millennials need to know how important a 401(k) can be when you are young and it is a necessity to give up a few things to put as much as you can away when you are young and your career is ahead of you."
Lisa Klubniken England, Publicist at LKE Publicity, adds, "You need savings to do the things that really matter, and you won't know what that truly is until your mid life, and then you'll realize that it all went by so quickly. We all want freedom to be who we are, and yet we don't realize in our 20's, in this society, it takes money to have that freedom."
Invest, But Do It Smartly
As a millennial, investing should be something that you think about once you tackled a few items on your money checklist: setting up a budget, working on your credit score, establishing an emergency fund and getting a debt reduction plan in place. Investing, much like playing a game of blackjack in Las Vegas, has some odds stacked against you. Sometimes you win, and sometimes you lose.
Robert Kraft, COO of SNN Incorporated, which is a financial news portal and publishing company, thinks millennials should be looking towards smart investing. Robert's got 5 top tips that millennials should think about before investing:
- How much money can you afford to lose?
- Determine how you can convert your interests into investment opportunities.
- Utilize the resources available to you.
- Create a portfolio and start following companies that pique your interest.
- Determine whether you want to open an online account or use a full service broker.
According to Robert, "For millennials, before subscribing to any newsletters, I highly suggest reading The Intelligent Investor by Benjamin Graham -- think Darwin's Origin of Species is to the theory of evolution; The Intelligent Investor is to the theory of value investing."
He adds, "Stock picking requires a personal interest, curiosity and focus on interesting public companies. Several factors to be considered in order to feel confidant in your action: research, sorting through choices, tracking a stock's performance and calculating how many companies to choose."
Take Advantage of Unexpected Money
We all like unexpected money, especially when it flows into our own bank account. Just like everything with money, unexpected money requires planning to make sure you properly handle the funds. No, this doesn't mean a luxurious shopping spree. While that might sound like a great idea in your 20s, your 40-year-old self will not be so appreciative.
"If you receive a significant influx in funds, such as a 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 replies.
Budget, Budget, Budget
It's time to get serious and know your numbers. While creating a budget might be the very last item on your to-do list, it is essential to maintaining a solid financial foundation. If you don't know where your money is going, how will you ever achieve your financial goals?
Aron couldn't agree more. "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 you easily plan for day-to-day spending activities such as entertainment, rent and eating out."
Finally, and most simply said by Esther Hopkins, Estate Planning Attorney at Hilliard Hopkins, "Create a budget and stick to it!!"
Photo credit: https://flic.kr/p/nELLhN