A Guide to Financial Planning for Millennials
If an age group has seen major economic transformations, it’s the millennials. Financially, this generation encountered the 2007-2008 financial crisis characterized by extreme inflation and borrowing. Besides that, the era is constantly attacked by student debts, personal debts, high costs of living, and unstable jobs, making it nearly impossible to save and plan for their finances.
Millennials, also referred to as Generation Y, can be defined as anyone born between 1981 and 1996 and is currently in their early forties and late twenties. On the other hand, financial planning refers to evaluating one’s financial strength concerning the current economy, trends, and needs.
Financial planning is crucial for millennials because the generation has been into plenty of economic fluctuations but now needs to wake up for the subsequent generations. With the constantly rising cost of living, they have no option left but to plan their finances critically instead of their preceding and succeeding generations.
Below are six financial planning tips for millennials, some of which can still be implemented in other generations:
1. Engage a Financial Advisor
Millennials can never go wrong with engaging financial advisors in their wealth management and related subjects. A financial advisor refers to an expert who offers specialized services regarding one’s finances, debts, savings, and anything financial.
With the changing economic features, you will likely find various financial advisors focused on different age groups or generations. For instance, millennials-based financial advisors strictly offer services customized to suit the millennials and their issues. They guide them into disciplined saving, fruitful investments, healthy borrowing, and proper financial planning.
2. Set and Clarify Your Goals
Another tip for succeeding financially as a millennial is setting realistic goals, clarifying them for proper guidance, and actively working towards achieving them. Millennials’ financial goals can either be short or long-term depending on their current financial status and other personal aspects.
Such plans could be saving for retirement, starting a business, paying off all debts, or purchasing a home. Think about what you want, how you wish to accomplish it, and within what period. With that in mind, millennials will likely work harder despite the current economic fluctuations.
3. Separate Essentials from Luxuries
Although Generation X is highly known for preferring luxuries over essentials, you will likely find some millennials trapped in the trend despite the financial challenges. When luxuries outweigh basic needs, one will likely fall into further constraints due to excessive borrowing, poor financial planning, and a high cost of living.
Therefore, it’s essential for millennials to critically understand what needs are primary and which ones are luxurious. The move helps you save significantly and protects you from unnecessary borrowing.
4. Automate Your Payments
Understandably, nearly everyone struggles to prioritize their bills, especially when their salary arrives. It’s possible to find yourself settling the Wi-Fi bill before the rent or running out of cash before paying your mortgage bill.
Therefore, it’s advisable to automate your bill payments so that when the money arrives, it’s directly deposited into their relevant accounts, such as rent, parking fee, WiFi, maintenance, or shopping. That way, you won’t experience cases where your salary gets depleted before settling the major bills due to being spent elsewhere.
5. Save and Save. Make It a Priority
Let credit be given where it’s due. Millennials already save better than the subsequent Generation X, while Alpha hasn’t known much about savings. However, they need to do better because many still suffer from poor savings plans or don’t have any savings. Your financial planning shouldn’t miss a savings system and different tactics to do it successfully.
Millennials should start saving as early as they receive their next payslip, regardless of age. Even better, you can automate your savings plan to deposit the percentage directly to the account when the paycheck arrives. The financial future is unpredictable, so savings are the only way to combat that.
6. Do It as a Group
Millennials are independent and love doing their things privately from the rest of the world. However, it would be better to engage your peers, colleagues, or family for more remarkable outcomes when it comes to financial planning.
That doesn’t mean you should always expose your next financial move to everyone or isolate yourself. Doing it as a group means you should be willing to dive into financial literacy from a course or friends, join a serious savings group, or participate in table banking.
Final Verdict
Financial planning for millennials isn’t as easy as everyone puts it, but it requires intense consideration, evaluation, and analysis. However, at least you now have six incredible tips for walking you through the desert of financial planning to the valley of success. Remember to make financial advisors and other experts such as accountants, bankers, and financial analysts your best friend for the best results possible.
