4 Financial Truths for Millennials

by | Dec 21, 2020 | Financial Planning

Developing good money habits in your early adult years can help you position yourself for financial stability and better grow your wealth over time. The sad truth is that many Millennials in their 20’s are unaware of how to best manage their money. They may regret the financial decisions they made in their 20’s well into their 30’s and 40’s.

Living here at the Jersey Shore, in Monmouth County, is not cheap.  Setting up your financial life early on is the best way to be financially successful in this area.

For Millennials looking to get into good money habits early, below are four things you should know:

1. Money and Material Goods Don’t Buy Happiness

It seems cliché and obvious, but it was true decades ago, and it’s still true today.

When you are young, you may think that if you save and accumulate enough money and wealth, that you will not have any problems, which is hardly the case. Even though money is an important part of life, if you measure your life by it, you are likely to find yourself unhappy. This can also be true of material possessions.

Getting that first job out of school, it can be easy to wildly spend this newfound money.  That new car or new pair of shoes may seemingly bring you happiness, but it is fleeting. The need to keep up with peers and acquire high-level material items that are outside of your budget is, unfortunately, a quick way to get into debt that can be hard to get out from under. 

2. Borrowing Money Responsibly is Crucial

Most people rarely make it through life without ever having to borrow money.  It is unfortunately a necessary thing in your adult financial life. While it is easy to tell you to simply not borrow any money in your 20’s, the truth is borrowing, and repaying the money is an important part of establishing a strong credit history. Since borrowing is an essential part of adult life, it is important to exercise caution when borrowing money. Saddling yourself with a mountain of debt is a quick way to turn your financial life upside down. 

Unfortunately, many young adults are already saddled with a large debt figure before they even begin their career due to student loans. The problem is, borrowing these large sums of money can have a major effect on your ability to borrow in the future as well as meet your financial needs. When trying to come up with tuition money, first look for available grant and scholarship money and when you have to borrow, only borrow what you will need to cover your most basic costs.

3. Make a Financial Plan Early

Make sure that your money has a place and that all of your expenses are accounted for in a budget. It may seem daunting at first to have a strict budget, but it is a great tool to help prevent you from overspending.  Knowing where all of your money is going will put you ahead of many of your peers. In your budget, you will need to include your housing, utilities, and any debt you might have. You will also want to set a monthly amount for clothing and groceries as these costs can add to a budget quickly and are often unaccounted for. Once you have spread your money out over all the necessities you can think of, you should create a budget for what you will contributing to your savings and emergency fund each month. 

4. Know the Importance of Having Cash on Hand

Your first instinct when you get an influx of money is to either pay off debt or maybe even invest it. While it is vital to put money away for retirement early and also keep your debt under control, it is always important to have cash on hand. Emergency situations can arise such as major car or house repairs or even losing a job. There are many bills that still do not allow credit cards for payments such as rent and mortgage, so not having cash on hand when life throws you a curve ball can have devastating consequences. Your goal for your emergency fund should be about three months of living expenses. The important thing to remember is always to replenish the money you take out when you are able. Especially early in life, there are plenty of big purchases coming.  It’s important to make sure you’re preparing for them wisely and not tying money up in restricted retirement accounts.

Prepare yourself for your future and help increase your chances of being financially secure by taking money matters seriously in your 20’s. By following the tips above, you will be taking the first steps to taking control of your money for the rest of your adult life. 

If you are a young Millennial that needs help getting things organized financially, we would be happy to speak with you.  Click here to schedule an initial call with one of our team members!

Be sure to follow along with our weekly video series, ‘The Mullooly Asset Show’, on our YouTube channel!