According to a survey conducted by the Pew Research Center, the national unemployment rate for adults ages 18 to 34 has declined to 7.7%. However, despite a 6% increase in weekly earnings over the last four years, 26% of Millennials are still living at home with their parents.
As young professionals work toward financial security and independence, below are my recommendations on what you can do to put yourselves in the best financial position:
1. Write Down Your Goals
It's been said that a goal without a plan is just a dream. So, what better way to start realizing your goals than identifying them, writing them down and creating a plan for achieving them?
From just $107.88 $24.99 for Kiplinger Personal Finance
Be a smarter, better informed investor.
Sign up for Kiplinger’s Free Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
Ask yourself where you'd like to be in five or even ten years from today. Then, create a plan that helps give you a baseline for measuring your goals. Remember, financial success doesn't happen overnight. Along with proper planning, it takes patience, dedication and consistency. Writing down your goals will help bring the vision of your future to life and give you something tangible to review.
2. Cut Expenses
Whether you're currently employed or not, you're likely to have expenses. Consider creating a budget as a way to benchmark incoming revenues and outgoing expenses. By continuously reviewing spending, you can easily identify opportunities to reduce fees or cut expenses altogether. Maybe you don't need the premium cable channels or the highest speed of internet. Cutting those costs are a quick and easy way to find dollars to pay down debt or reinvest into a savings plan.
3. Automate Savings
Automating a savings plan is one of the best ways to succeed at saving. If you have to manually log in to your bank account and transfer funds into a savings account weekly or monthly, you are less likely to do it. I recommend working with a bank or financial planner to automate the process so you don't have to think about it. Start out with a small amount—even if it is just $20 per month—and increase it as you get more comfortable with the process.
4. Plan for Retirement
Yes, retirement. Even though it may be decades away, it's never too early to starting thinking about it. In fact, the sooner you start, the better the outcome. Retirement accounts provide tax-deferred growth, a powerful feature to help boost your long-term returns and income years from now when you stop working.
If you are working, and your company offers a 401(k) plan, see if your employer matches a portion of your contributions. At the very least, contribute enough to receive the full company match (often around 5% of your pay annually, though percentages vary). Otherwise, contribute monthly to an individual retirement account such as a Roth IRA. Just be sure to read up on the latest Roth IRA rules for 2016, and consult with your trusted financial professionals. As with savings, you can start with small, monthly contributions, and increase as you get more comfortable with regularly putting away money and, with luck, make more income.
5. Consider a Side Hustle
Working part-time or in a freelance position is a great way to supplement your income. Whether it's signing up to be an outside consultant through sites such as HourlyNerd, driving for Uber or Lyft or even bartending at a local restaurant, a side hustle can give you extra income you need, with that flexibility you enjoy.
Regardless of which tip or tips you may follow, remember to take control of your current financial situation and prepare for the future while time is on your side. By making small changes to the way you view and manage your finances, you're taking the steps needed to gain financial freedom and be successful for years to come.
Taylor Schulte, CFP® is founder and CEO of Define Financial, a San Diego-based fee-only firm. He is passionate about helping clients accumulate wealth and plan for retirement.
-
Stocks Hit Fresh Highs Ahead of the Fed As Earnings Pump Optimism: Stock Market TodaySHW and UNH were two of the best Dow Jones stocks Tuesday, thanks to solid earnings reports, and MSFT closed with a $4 trillion market cap.
-
Selling Your Haunted House? What You Have to Tell Buyers (and What You Don’t)You don’t need ghosts to spook buyers, sometimes a home’s past is enough. Here’s what sellers should know about disclosure laws, pricing and perception when a property has a haunted history.
-
This Is Why Judge Judy Says Details Are Important in Contracts: This Contract Had HolesA couple's disastrous experience with reclaimed wood flooring led to safety hazards and a lesson in the critical importance of detailed contracts.
-
Should Your Brokerage Firm Be Your Bookie? A Financial Professional Weighs InSome brokerage firms are promoting 'event contracts,' which are essentially yes-or-no wagers, blurring the lines between investing and gambling.
-
Supermarkets Have Become a Pickpockets' Paradise: How to Avoid Falling VictimSome stores regularly rearrange inventory with the aim of increasing purchases, and they're creating opportunities for thieves to steal from customers.
-
Budget Hacks Won't Cut It: These Five Strategies From a Financial Planner Can Help Build Significant WealthCutting out your daily latte might make you feel virtuous, but tracking pennies won't pay off. Here are some strategies that can actually build wealth.
-
To Unwrap a Budget-Friendly Holiday, Consider These Smart Moves From a Financial ProfessionalYou can avoid a 'holiday hangover' of debt by setting a realistic budget, making a detailed list, considering alternative gifts, starting to save now and more.
-
Treat Home Equity Like Other Investments in Your Retirement Plan: Look at Its Track RecordHomeowners who are considering using home equity in their retirement plan can analyze it like they do their other investments. Here's how.
-
Why Does It Take Insurers So Darn Long to Pay Claims? An Insurance Expert ExplainsThe process of verification, investigation and cost assessment after a loss is complex and goes beyond simply cutting a check.
-
Two Reasons to Consider Deferred Compensation in the Wake of the OBBB, From a Financial PlannerDeferred compensation plans let you potentially lower your current taxes and help to keep you out of a higher tax bracket. It's important to consider the risks.
