12 Smart Money Moves Millennials Should Make Right Now

Some young adults seem stuck: Baby boomers took the best of what’s available and those nearing middle age always stand in line just ahead of millennials. If you’re a millennial, born between 1980 and 2000, you just need to change habits and work harder on your finances.

Set at least one financial goal for this year. This goal must be fairly substantial yet doable in the remaining months of 2015.

Point is, if you successfully achieve one goal, you can achieve others. Start slow and work up. I also review my goals every quarter.

Create a three-year plan. A plan differs from a goal because you set an objective – usually several objectives at the same time. You also allow yourself a specific amount of time to accomplish them and create a series of steps to make them happen.

Have as many individual goals within your plan as you like. For example, your plan can include getting out of debt, starting or increasing your retirement savings or building an emergency fund of six months’ expenses. Set the plan for three years and create strategies for achieving each objective within that time.

Write your plan, even type it. Then you refer to it regularly until your action steps become second-nature.

Save for retirement right now. A lot of people feel overwhelmed at the money needed to set up a retirement plan. But starting one is pretty easy.

Sign up for your employer-sponsored retirement plan at work. If your job doesn’t offer a plan, set up an individual retirement account such as a Roth IRA, which provides tax-free growth and allows you to contribute up to $5,500 a year.

You can fund either with payroll deductions automatically taken out of your paycheck. Your contribution can be small; just get started now.

Nudge your plan contribution. If you currently save 6% of your pay – typically about the maximum to take advantage of your employer’s matching contributions, if any – increase to 7% this year. Next year, increase to 8%, and so on.

Expanding your contributions in small increments usually means you hardly notice the drop in your paycheck, particularly if you get annual pay raises of at least 2%.

Tune out doom and gloom. The world always tells us to worry. Be concerned, not worried, and sufficiently concerned to take action that makes the worries go away.

Pay off one credit card and then one more. If you carry a lot of debt, you probably already realize that you won’t get out of it anytime soon – and you don’t have to.

Pick one of your credit cards and plan how to pay it off as soon as possible. Start with the card with the smallest balance. Once you pay off that first card, target another, possibly the card with the second-smallest balance.

Once you pay off two cards, your debt cutting snowballs. Keep going until all of your credit cards are paid off, even if it takes several years.

Set bills for auto pay. More than just annoying, paying bills can strain your emotions if your budget is tight. Spare yourself the aggravation and set up your bills for automatic payment from your bank account. You do have to do this with each creditor but once most or all are set up this way, you enjoy more time for everything else – not to mention a lot less stress.

Create financial affirmations. Affirmations are brief sayings that resonate with you. They can deal with the benefits of certain actions, helping you to create a mindset to achieve a goal or simply restate your plan. Some examples: “In five years (or four, or three – your choice) I will be free of debt,” or “I’m a saver, not a spender.”

Write these down and place them in areas of your home you go to frequently. For example, placing affirmations on your bathroom mirror guarantees that you see them every day.

Read at least one good financial book. Ideally, you read one every month. If you usually fall short of that, settle for getting through just one good money book, no matter how long that takes. Investigate and read as many as possible, and become a regular follower of a few financial blogs.

Volunteer. Sometimes a little perspective goes a long way in getting the upper hand on your finances. Helping people who are in worse situations than you can make you realize your good fortune.

Drop a free-spending friend. If undisciplined spenders dominate your social circle, they might unintentionally sabotage your efforts at greater financial responsibility. In a potentially major step in your financial independence, find a few new friends who spend more conservatively.

Teach your kids about money. Maybe you want to shield your young kids from the sometimes-harsh realities of personal finance. But if your parents did that with you, you may struggle with the result even now.

Make your kids aware of money’s effect on their lives as early as possible. An allowance is a good start, particularly one tied to chores.

(Our next article looks at controlling spending and credit, as well as ways non-financial improvements can help your money management.)

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Jeff Rose, CFP, is the founder of Alliance Wealth Management in Carbondale, Ill., and also is the founder of the website Good Financial Cents and Life Insurance by Jeff.

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