Check out some solutions that can put you on the path to financial freedom.
Millennials have been through a lot. From the 2008 recession to a pandemic and never-before-seen student loan debt—those are just the tip of the iceberg when it comes to tumultuous financial predicaments. Some even deem that generation the unluckiest in U.S. History. To make matters worse, millennials earn 20% less than baby boomers did, despite being better educated. Sheesh!
Trust us we’re not just being total bummers since there is a silver lining. While some of these challenges may have been out of their control, it’s important to understand some of the shortcomings that may have been self-created by millenials. It may give us a determination on how millennials can have a healthier relationship with money and finances. Let’s deep dive into how setting a budget and planning for your future can help you gain (pun intended) financial freedom.
The Wyshbox Blog
- Not sticking to a budget
- Not planning for retirement
- Not thinking about lifestyle inflation
- Not setting up an emergency fund
- Not getting a life insurance policy
Not sticking to a budget
One of the biggest challenges millennials face is managing money in a smart way. Who among us is strong enough to pass up some retail therapy, a relaxing dinner with friends, or a quick weekend getaway. The issue is, while you should enjoy your life, spending money without any sense of a budget will catch up with you and can result in out-of-control credit card spending and living beyond your means.
Budget is actually an apt word to use, since being smart about spending really is the key way to get a grip on your cash money. Tools like budget tracker apps can help you stay on top of where your money is going and also understand where to cut costs. For instance, instead of spending $5 on gourmet coffee, make your morning beverage at home. Figure out if you’re spending more money on dinners than on groceries. All those little things add up.
Not planning for retirement
If the terms 401K or Roth IRA sound foreign to you, don’t sweat it. Understanding the ins-and-outs of how to set up retirement accounts can be intimidating. Luckily, there are many resources available to help you do research on the terminology behind retirement planning, as well as what is the best option for you.
The easiest way may be setting up an account through your employer. Your HR or People team can provide guidance on how to get started. If you own your own business or are part of the gig economy workforce, you have different options to be able to save for retirement. Solo 401K, Individual Retirement Arrangement (IRA) accounts, and Single Employee Pension are other choices that may work for you.
Get more in depth information via the IRS website.
Not thinking about lifestyle inflation
The great Biggie Smalls said it best: “mo’ money, mo’ problems” which basically means the more we make, the more we spend. Even social media can impact how people aspire to live, where influencers have seemingly endless amounts of cash to spend on glamorous trips and expensive clothes. Trying to keep up with the Joneses is a real thing but just remember to prioritize the important items and refer to your budget.
For those of us who live outside the matrix, setting up a budget (there’s that word again) is really the best way to keep your money in check. One way to set financial goals is by using the 50/20/30 rule where 50% of your paycheck goes towards your needs (rent and bills), 30% goes towards wants (non-essential fun,) and 20% goes towards savings.
Having set percentages can help you stay on top of bills, spend money on things you want, and put some money in a nest egg.
Not setting up an emergency fund
Many millennials find if their car breaks down or they find themselves jobless, they don’t have any money set aside to fall back on. Financial experts generally encourage you to set aside three to six months’ worth of living expenses in an emergency fund. Some even want you to stash away a year’s worth. While those parameters might seem extreme, it’s important to not get caught up without any type of financial resource if something unexpected happens.
If the idea of even starting an emergency fund overwhelms you, talk to a financial advisor to discuss options on how to not just have retirement and a savings account, but also a place to dip in at a moment’s notice. The ongoing COVID-19 pandemic has definitely demonstrated that no one can predict the future, so it’s best to think ahead.
Not getting a life insurance policy
If the term life insurance is something you’re unfamiliar with it’s understandable. Getting a policy to protect you and your loved ones may not be top of mind at this time because it’s often seen as something you get later in life, but it is actually better to get a policy now rather than later. Getting insured when you’re younger can lock in lower rates and help you reap other benefits.
A great solution is getting a term life insurance policy with Wyshbox which offers personalized service, great customer support, and a chance to create custom Wyshes that can be granted after you die.
While you might not have as many financial assets now, a spouse, or kids to protect, you do have to consider other ways your policy can provide coverage. For instance, if you have private student loans and had parents or another guarantor co sign the loan, they will be responsible for that debt should you pass away before it’s paid off. Having life insurance can ensure no one will have to cover that loan if you’re unable to do so yourself.
As a millennial, or any person really, dealing with finances in an uncertain world can cause a certain amount of stress. A way to curb that anxiety is not only making sure to set a budget, for bills, fun, and savings, but also setting up protection now with life insurance.