If you’re a millennial, also known as Gen Y, your financial needs likely differ greatly from those of older generations. Learn how to create a financial plan that aligns with your unique circumstances and goals. Consider these tips and methods when planning your financial future.
Tips for Developing a Financial Plan
1. Use Money as a Tool, Not a Goal
Before you start planning, think about what you want to achieve with your money. Do you want to travel, start a business, or support a social cause? Make sure these priorities are part of your financial plan.
2. You Are Your Greatest Asset
At your age, your potential future earnings are likely your biggest asset. To protect this, ensure you have good health, disability, and life insurance policies, which should be affordable due to your youth.
3. Time Is on Your Side
Your age gives you a significant advantage. Even small savings or investments of $50 to $100 a month can grow substantially over time. The key is to start early and stay consistent.
4. Compare Benefits as Well as Salary
Nowadays, a company’s benefits package can be as important as the salary. Before accepting a job offer, review the company’s health, dental, life insurance, and retirement benefits. A good benefits package can save you a lot over the years.
Since millennials started working in the early 2000s, they have faced many economic challenges, including 9/11, a housing crisis, the Great Recession, and a global pandemic.
5. Determine a Baseline Budget and Build from There
While it’s important to live within your means, many people don’t create or stick to a monthly budget. For millennials who do, the benefits can add up quickly, especially if you can save or invest the difference as your salary increases.
6. Use Social Media Wisely
Social media can be a great source of financial information, but it can also spread misinformation. Ensure that the sources you follow are credible, and use your network to check the reliability of any financial services or advisors you consider.
7. Put Your Unused Mortgage Payments to Work
Many millennials are hesitant to buy homes due to past market crashes. Renting can often be cheaper than buying, allowing you to invest, save, or address other financial needs with the extra cash.
8. Take Responsibility for Your Retirement
Although retirement may seem far off, it will come sooner than you think. With traditional pensions declining, explore other options like 401(k)s, traditional IRAs, Roth IRAs, and tax-deferred annuities to prepare for your retirement.
Millennials may have faced a rough start, but there is still plenty of time to establish a solid financial plan. If you need more information on any of these topics, a New York Life agent will be happy to help.
