If you’re a Millennial, chances are you are unsure about your retirement. According to a recent survey by Bankrate, the biggest retirement fear among Millennials is running out of money. With the fluctuating job market and the disappearance of traditional pension plans, it’s vital that you start planning for your future.
Here are some tips to help you make your future more financially secure:
1) Create a Budget Plan
It’s important to know what you’re spending and how you’re spending it. Creating a budget that takes into account costs for essentials (food, shelter and technology), bills, debt and savings, will help you to better organize and understand your financial priorities. If you don’t set aside money you might not be able to pursue potential goals like going back to school or buying your first home.
2) Pay Yourself First
It’s a good idea to put some money away before you even have a chance to spend it. Before buying that shiny new Star Wars toy, ask yourself if you really need it. Try going out to eat twice a week instead of every day. Making a few changes to your spending habits can have a tremendous impact on your wallet. A savings account also gives you a buffer in case you lose your job or have a medical emergency. Try to put away at least three to six months of living expenses in savings.
3) Invest in Your Retirement
As a millennial, you are probably new to investing, but it should be a priority. The earlier you start the better off you will be down the road. Make sure you contribute to your employer’s 401(k) or equivalent retirement program. Many employers match the amount offered on contributions when you reach a certain level, so take advantage. Some retirement plans also offer target-date retirement funds, which do much of the investment work for you. Research your options, and don’t drag your feet on getting started! You could be missing out on thousands of dollars by procrastinating.
4) Know Good Debt from Bad
Not all debt is necessarily bad. Debt that helps you generate income and increases your net worth is considered “good.” Your student loans, for example, fall under good debt because you invested in an education. Credit card debt, on the other hand, can be bad. It’s important to build credit history, but be careful with your cards. Any debt that doesn’t go up in value or generate income can hurt you financially. To get debt free, put extra cash toward the debt with the highest interest rate first.
5) Talk with a Financial Professional
Transitioning to the real world after college can be difficult. But you likely know more than a few people who can give you advice on how to navigate your financial life. Reach out to people you trust – parents, friends, professors – to help you find a trusted financial professional, and start planning for your financial future.