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Millennials, Gen Y, Gen Next, Generation Me, the Connected Generation have countless options when it comes to accessing information about how best to handle their finances. But easy access doesn’t mean it’s relevant. What applied to our parents’ financial position isn’t necessarily what applies today….
But easy access doesn’t mean it’s relevant.
What applied to our parents’ financial position isn’t necessarily what applies today. Staying at the same job for the rest of your life? Not likely. Buying a home? Maybe later. Investing as a hobby when you’re 25? Tell me more.
“There is a huge gap between the advice financial planners are trained to provide and the advice millennials need,” says Alan Moore , co-founder of the XY Planning Network , which is focused on helping younger people figure out their finances. “Keep in mind that there are more certified financial planners over 70 than under 30.”
The education to become a financial planner focuses on retirement planning, tax strategies for high-income earners, and complex estate-planning topics only applicable to people with more than $5 million, he says.
While a recent study from the Transamerica Center for Retirement Studies shows that 67 percent of twenty-somethings are already saving for retirement, many are less focused on 401(k)s and IRAs and more concerned with creating new sources of income.
“I don’t talk to people in their 30s about retirement,” Moore, a Millennial himself at 27, says. Instead, he focuses on independence. “I talk about creating passive-income streams, living a great life today while saving for the future, getting into a career that you love.”
He adds, “I personally make money in about seven different ways, any one of which could have been a full-time job 20 years ago.”
In addition to establishing multiple income streams, Moore recommends paying attention to your credit, and establishing credit history as soon as possible—as long as you can trust yourself.
“The first thing I always remind young people is that if there is a risk they might miss a payment or make late payments, don’t get a credit card,” he says. “If they know they will make payments on time, and preferably pay off the balance each month in full, then signing up for a no-fee credit card might be a good place to start.”
Sophia Bera, a financial planner in her 30s who owns her own business, Gen Y Planning , also wants her clients to know that when it comes to personal finances, there’s more to it than “get a secure job, buy a house, save for retirement.”
“I spend a lot of time trying to talk Millennials out of buying homes,” she says. “There’s a lot of pressure from family to buy a house as soon as they’re making good money, but oftentimes that isn’t a good fit if they know they’re going to move in a few years or they have other financial priorities. I don’t believe renting is ‘throwing away money every month.’”
Instead, she says focusing on building net worth is just as fulfilling as building equity.
Putting a financial plan into action
Stephanie Hardiman Simon, 27, and a social media and communications manager for a government watchdog organization, shares Moore’s desire for financial independence.
“My husband and I are aiming to retire by 40 , with the assumption that we can work sporadically afterward if we wish and pursue other projects we may be passionate about without worrying about the bottom line,” she says.
How is she doing that? By living smart for her lifestyle. She lives close to work to save on a commute, is cutting her student loan debt as quickly as possible, tries to avoid carrying a balance on her credit cards, and contributes to her 401(k) as much as she can to reduce taxable income.
“My family often encourages us to buy a new car or make other splurges because we can afford it, but we’d rather save the money and drive around in a car with more than 240,000 miles on it,” she says.
While there are clearly different financial behaviors with the Millennial generation, some of the more “tried and true” behaviors remain. Bethany Remely, a 30-year-old who works in client support at an advisory-based firm, has incorporated some of the following practices into her own life.
“Start a retirement fund. Today. Pay yourself first and put money into savings too,” Remely says. She adds that automatic withdrawals are “gold” for accomplishing this.
As a Millennial myself, I definitely believe in the practice of: Save more, earn more. The automatic, pay-yourself-first savings philosophy is so simple, but it’s also staggeringly effective. Setting up that automatic transfer one time has put so much money into my savings account without my noticing that I’m actually surprised every time I see how much is in there.
It all adds up over time—something Millennials definitely have.
Michelle Stoffel Huffman is a researcher and staff writer for Think Glink Media, and a regular contributor to the Equifax Finance Blog. Prior to joining TGM, Michelle worked for the Chicago Tribune as a daily news reporter and community manager. She now specializes in real estate industry news, consumer financial reporting, and home design and decor.
The information contained in this blog post is designed to generally educate and inform visitors to the Equifax Finance Blog. The blog posts do not give, and should not be assumed to provide, personalized tax, investment, real estate, legal, retirement, credit, personal financial, or other professional advice. Before making any financial decision, you should always consult with the appropriate professionals who can explain your options, rights, and legal responsibilities, and advise you on any tax, legal, credit, or business implications that may result from those decisions. The views and opinions expressed by the authors of blog posts are their own views and may not be the views or opinions of Equifax, Inc. and/or its affiliates.
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