Each generation has its unique financial challenges, but there’s excellent news for Millennials: time is on your side. Even if you’ve made mistakes already, you have time to correct your course, set worthy goals and make the changes necessary to achieve those goals.
Let’s take a look at ways Millennials can set themselves up for a prosperous and comfortable future.
Student loans and consumer debt often prevent Millennials from purchasing property and investing for the future. If you’ve already accumulated personal debt, make an aggressive plan to eliminate it as quickly as possible.
Start with your highest interest loan and pay off as much extra principal as you can each month, sacrificing luxuries if necessary. Once you’ve paid off that loan, move on to the loan with the next highest interest rate. Once the first loan is paid off, you’ll start to make rapid progress, and you’ll enjoy the freedom you feel as each debt is fully repaid.
Even if you don’t currently have the job of your dreams, do everything you can to show your employer that you’re indispensable. Solid recommendations from your employer can go a long way toward building your future career, and you never know how a casual job may turn into a lifetime pursuit.
No previous generation has had access to global opportunities, and freelance work like Millennials have. Additionally, many skills can be learned for free online. Invest in yourself during these early years, and always seek for opportunities to improve. Take extra jobs if those opportunities come your way, your early successes will help your older self.
One of the most significant financial risks for Millennials is that so many are living pay cheque to pay cheque. When something goes wrong, such as costly car repairs or the sudden loss of income, you have to immediately slip back into debt.
To minimise this risk, start building a savings account for emergency expenses. One of the easiest ways to do this is to set up an automatic transfer from your transactions to your savings account each month. If you schedule it for right after you get paid, you won’t even notice its absence. Start as small as you need to, but start. Your emergency fund will grow, and you’ll feel much less financial anxiety.
The earlier you can purchase your primary residence, the better off you’ll be in retirement, so consider how you can work toward this goal. Keep in mind, however, that overextending yourself can backfire significantly, so save steadily for your deposit and be sensible about how much you can afford.
Until you’re ready to purchase a property, be a responsible renter and save each month for your future deposit. As you save, educate yourself about the real estate market. Learn about the area in which you hope to buy. Follow the trends, learn about home values and position yourself to make an informed purchase when the time is right.
Since you never really see your super contributions, it’s easy to forget that the money is yours! But it is, and no one but you will look after it and make sure it’s working as hard for your retirement as you are.
It’s not uncommon to switch jobs frequently in the early years of your career. In fact, a recent poll showed that 75% of Millennials felt that job hopping would help their careers. As you move through jobs, remember that your super accounts will need your attention. If you have three different supers from three different companies, you’ll have to pay three sets of fees on your retirement savings. The solution to this problem is to consolidate your supers into one easily manageable account that you have control over at all times.
These early years of your career are also the perfect time to salary sacrifice. Not only can you reduce your taxes, but you can also give your retirement savings a substantial boost.
Learn more about how you can start your financial life off on the right foot by talking with one of our wealth advisers. Whether you’re concerned about buying your first property or managing your super, we can answer your questions and help you succeed.