7 tips for millennials who are trying to reach the next financial level
The Great Recession changed the way young people think about saving and spending. Not only that, but many of them saw their parents lose big investments in the stock or real estate markets, a situation which may have scared them off of making their own investments.
Research speaks pretty clear about this matter, as well. According to Bank of America's Year-End Millennial Snapshot, which analyzed data from over 3,500 millennials in 2015, young people continue to struggle financially because of factors such as the tough job market, hesitancy to invest and student loans. A survey provided by the investment app Acorns, based on findings from over a thousand people, found that 85 percent of millennials have not yet invested any money in the stock market out of discomfort or fear.
Jennifer Barrett, founding editor of Grow, a digital magazine published by Acorns and aimed at millennials, claims that the members of this younger generation have to be more proactive and engage with finance much earlier than older generations.
"Millennials are on their own in a lot of ways," Barrett added. "That's why forming good money habits is a key part of creating financial stability for them."
According to U.S. News & World Report and financial experts, young people should take into account these simple but relevant tips, in order to bring their finances to the next level.
1. Start as soon as possible to manage your financial situation.
According to David Weliver, founder of the millennial finance website Money Under 30, "The biggest money mistake most people make is simply waiting too long to care. When you're juggling your career, love life and other big issues, it's hard to also find time for your finances."
2. Make sure to avoid loss-making.
Once we find a way to end the month positive at least a couple hundred dollars, then we can start making choices about saving and investing. Erin Lowry, founder of BrokeMillennial.com and contributor to the U.S. News My Money blog, pointed ou that "the best way to shed the feeling of living on a tight budget is to cut spending while increasing your earning power."
3. Increase saving as soon as their levels rise occurs.
As Barrett suggests, anytime a windfall occurs, put it directly into your retirement savings. This increases the contribution right after you notice the rise, which is what really makes the difference.
4. Don't hesitate to invest.
It is important to have an emergency fund bounded in a safe spot, like a bank account, in order to be able to cover unexpected expenses.
5. Think about the future.
While taking out insurance or funding retirement are not the overriding investments now, they could save us from financial challenges in the future.
6. Always plan the next level to reach.
Once a basic level of comfort with savings has been achieved, it is time to tackle the next task, like filling emergency savings fund or opening a retirement account. "Don't get comfortable with your status quo," Lowry said. "Push yourself further by setting financial goals and making them specific."