The generation born between the early 1980s and the early 2000s are known as Milliennials. These smart and talented young professionals are taking the world by storm. From tech start-ups to social networks, the Milliennial generation has already made a mark on the world. As they enter the professional workforce, Milliennials face many challenges. In making the right choices today, these young professionals can set themselves up for financial success. This is why we’re devoting today’s post to common missteps that we urge Milliennials to avoid. If you, or someone you love, is a Milliennial, please take note!
1. Not Saving for Retirement
Most young professionals fail to plan for retirement, a mistake which can have lifelong implications. A 2013 survey from GFfK Roper Public Affairs & Corporate Communication found that two thirds of Milliennials plan to retire by age 65, yet 70% have not yet started saving for retirement. In addition, half of those surveyed plan to one day draw social security – though the reserve is projected to be exhausted by 2033. We encourage all professionals, regardless of age, to plan early and stick to it! If your employer offers 401(k) matching, take full advantage of it. If you can afford to contribute more from time to time, do it! This is the best way to set yourself up for a stress-free, on-time retirement.
Though it is not always a good idea to invest in real estate, it is also important to consider your options. Purchasing a modest home or condo will not only help you to build credit, but it will also enable you to build equity. With the real estate market still slowly rebounding, now is a great time to considering buying.
3. Not Budgeting
Setting, and sticking, to a budget is important at every stage of life. Budgeting from a young age will set a precedent for financial success for many years to come. Set a budget that enables you to splurge from time to time, but also allows you to save and prepare for the future.
4. Living on Credit
Allowing credit cards to add up can be detrimental to your financial success. A study from credit-reporting agency Experian tells us that credit utilization among Milliennials is higher than other generations. This means that their credit debt to credit limit ratio is high. This, combined with a high incidents of late payments, tells us that Milliennials, on average, have lower credit scores than their older counterparts.
When used properly, and paid off in full every month, credit cards can help you build credit while earning miles and rewards. If, however, you cannot afford to pay your credit card off every month, we urge you to use it sparingly.
5. Foregoing Life Insurance
Life insurance is yet another topic that most young people rarely consider. Yet, life insurance is highly affordable if purchased when you are young and in good health. Whether you’re single or starting a family, there is a need for life insurance protection at every stage of life. Ask yourself who would be left to settle your outstanding debts if you were to pass away tomorrow. If the burden would fall on a loved one, you need life insurance. If you’re a newlywed, or plan to get married in the near future, life insurance will provide for your spouse if you are no longer able.
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There you have it, five common missteps that Milliennials should avoid. If you, or a loved one, are part of this booming generation, we encourage you to consider each carefully. Now is your chance to set yourself up for long term financial success.
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