Personal Finance Series #9: Finance Tips for Millenials

Hi there,

Today, I want to discuss some financial tips for the young adults out there. Looking around, I see millennials (a loosely defined demographic called the ‘Y-Generation’) making lots of mistakes that can mean trouble down the road. Following these simple steps will help you stay the course and safeguard your financial future.

1. Budgeting: it is extremely important to know where your money goes. We all know how easy it is to spend money, but do we always track the spending? You would be surprised to find out how much we spend on non-essential items. The key is to spend LESS than what we make. Otherwise, you will be insolvent and mired in debt forever. First thing to do is to budget your spending and know exactly what types of expenses you incur each month.

2. Start Saving: If you budget wisely and spend less than what you earn, you should have some extra money left over at the end of each month. Now it’s time to save that money inside an emergency fund. Most experts recommend an emergency ‘rainy’ day fund, equal to 3-6 months of monthly living expenses. This fund will allow you to weather the storm that life sometimes throws at us, such as losing a job or facing unexpected medical bills. Once you can save beyond that point, then it’s time to…

3. Start a Retirement Fund: Most corporations provide a 401(K) retirement account. All contributions are made on a pre-tax basis, and many provide a company match for a portion of your contributions. Also, 401(K) accounts usually have much higher annual maximum contribution threshold versus a regular Individual Retirement Account ‘IRA’. So take advantage and don’t leave money on the table! If the 401(K) option is not available, then you can open an IRA account. Key is to shield your money from taxes and start saving for retirement as soon as possible, in order for your investments to grow over time via compounded interest and capital gains.

4. Stay Healthy: even if you have health insurance, visiting the doctor/hospital will set you back financially with out-of-pocket expenses like deductibles and co-pays. If you don’t have health insurance, it’s even more imperative to stay out of the doctor’s office! So exercise regularly and eat balanced nutritious meals with plenty of vegetables and fruits! As they say, you should eat a ‘rainbow’ of vegetables and fruits (especially colorful veggies) that contains vitamins and minerals that fight illnesses and cancer. Medical costs are going through the roof these days and they can easily siphon off your savings if you are not careful.

5. Get Insurance: it only takes one catastrophe to ruin your finances. Whether it’s medical, car, or home/renters insurance, you don’t want to face a bad situation without insurance. If your company does not provide medical insurance coverage, then shop for one via the government marketplace or other private exchanges. If you find premiums to be unaffordable, then one option is to choose a high-deductible plan. Yes, out-of-pocket expenses are higher with these plans, but isn’t the purpose of insurance to protect you against catastrophes? Also, get a good plan for your home and car; it’s always a better idea to pay a few more dollars a month in insurance premiums if you can get much more coverage protection.

If you follow these simple rules, you will be way ahead of the curve (and you don’t need to pay thousands to a professional financial planner who would say the same things)!

Hope you enjoyed this article. Which one(s) do you think will help your situation the most? Please reply and let’s share our thoughts together. Thanks for reading!

If you liked this article, check out my previous posts below:

Personal Finance Series #8: How to Manage Your Debt

Personal Finance Series #7: Stop Wasting Your Money!

Personal Finance Series #6: Retirement Planning

Personal Finance Series #5: How to Get a Pay Raise

Personal Finance Series #4: Investment Advice - Part Two

Personal Finance Series #3: Investment Advice from Warren Buffett

Personal Finance Series #2: Top Money-Saving Tips

About the Author : I am a cryptocurrency enthusiast and a U.S. Certified Public Accountant with over 15 years of experience in accounting, taxation, and finance.

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