Millennials need to start saving as soon as possible
The landscape for younger professionals has shifted from years ago. For example, in an Allstate/National Journal Heartland Monitor poll, almost 30 percent of Millennials said that their top financial challenges are whittling away at student loan debt, which has skyrocketed, and saving for major purchases such as a house. In contrast, younger professionals from past generations are focused on making ends meet and avoiding further debt. If you’re a Millennial focusing on paying down debt, it’s still important to start saving. Time is your best friend. Start saving now, and your money has plenty of time to accumulate and multiply.
- Participate in your employer’s retirement plan. If you wait even a couple of years before enrolling, you could miss out on many thousands of dollars. Contribute enough to get matching funds. That’s free money!
- Get into a savings mindset. Divert money into savings starting with your first paycheck. Only have $5 to spare? Spare it! Build an emergency fund with at least three months of living expenses, and after you do that, diversify with CDs and other types of investments. It really is important not to skip the emergency-fund step. Such funds make sure you don’t have to use your credit cards (with their high interest rates) when emergencies occur, and they will.
- Live more simply and within your means. For example, pack your lunch instead of eating out every day, and save $3,000. Put that savings into an IRA, and let time help accumulate your wealth. Put away the credit cards, budget, and avoid racking up unnecessary debt. Live with roommates instead of alone.
- Pay more than the minimums. Whether you’re focusing on credit card bills or student loan payments, you’re spending a lot in interest. Paying more than the minimum amount due reduces your principal faster, saving you lots of money on interest in the long run.