Older generations often describe Millennials as the spoiled lazy kids who have no idea of what the “real world” is like. But that was when they were kids many years back. These Millennials are all grown-up now, finishing university, starting a career, climbing the corporate ladder, and starting a family. They’re busy living their lives and making it better.
A recent study debunks this assumption and proved that most Millennials are actually very focused on their finances. They are now interested in savings and investments. And are cautious about their financial future.
So here’s the deal.
If you are a Millennial and thinking about where you should pour your hard-earned money, then you should be ready to dip your toe into the world of investing. Do you want to grow your financial portfolio and enjoy your future retirement as well? Then, follow these 6 wise pieces of financial advice to get you started:
1. Get out of Debts
Is debt really unavoidable? You may be into it right now, may it be minor or major ones. And it’s an oppressive burden that prevents you from enjoying the money you should have. Avoiding debts may be difficult to do, but it is possible.
Track where your money goes each month and you might be surprised to find out how much you’re wasting on things you don’t need. To fill the gap on pour spending habits, you resort to getting loans and credits. This behaviour will keep you in debt and it’ll be hard to get out of.
First, simplify your life and learn to live with less. Believe in the words ‘enough’ and ‘sufficient’ and embrace them in your daily life. If you are already in debt, don’t feel hopeless. There are ways for you to pay debt faster and you will soon enjoy the benefits of being debt-free.
2. Save for Emergency Funds
Life can come in the form of unexpected and sometimes unfortunate events. It can be a car accident, random illness, or job loss. The question is, are you prepared for when life happens? Imagine, constantly having to pull out money from your savings and draining your bank account every time an emergency happens.
In “The Total Money Makeover,” financial expert Dave Ramsey explains why it is crucial to building a solid emergency fund. Life mishaps are like bumps on the road that can derail you, but with an emergency fund, you can cope and stay on track. Ramsey also added that an emergency fund is exclusive money for the unexpected and there should be no way that you use it for your daily expenses, tuition fees, or vacations.
3. Find Extra Income
Having a legitimate side hustle is one of your best options to supplement your finances. One-third of Millennials said, ideally, they would want part-time work coupled with freelancing on the side, according to a recent report by employment site FlexJobs. You can start a blog or sell products on Etsy. Find the best fit for you. You can turn your hobby and passion into income generating activities.
Being able to multitask well is an asset you can carry over into the other areas of your life. Ensure to prioritize your primary source of income, your job or your business. The secondary and extra sources come after it. Manage your time, effort, and resources well, so that you won’t neglect a priority.
4. Seek Expert Advice
Before making your first investment, seeking guidance is important. A skilled financial professional can be a big help for you to determine the best options for investing. An expert’s advice will always come in handy.
They’ll spend time understanding your financial data. Are you saving too little? Will the investments you make earn an adequate level of return? Do you understand the risks involved? You will be offered the best advice to help you to devise a strategy that fits your ability to bear risks and your investment goals.
5. Acquire Insurance
As a Millennial, you probably avoid purchasing life insurance because of misconceptions. You always reason that it’s expensive, not yet necessary and you’re still young and healthy to get one for yourself. But here are some strong indicators why you should purchase life insurance early in your life:
- Your post-secondary education debt. According to Statistics Canada, the average Canadian university graduate finishes school with more than $26,000 in student debt. So, if you are the one who is still paying down an amount that can be transferred to your loved ones, you need to seriously consider life insurance.
- You have a future family to protect. You’ll be ready to settle down, get married, and start a family at some point in your life. If you‘ll have your own family by then and want to ensure they’ll be taken care of, life insurance is a great investment. By having the right coverage in place, you can ensure that your family has the financial stability they’ll need in the event of an untimely death. Even if you don’t end up getting married or having kids, getting life insurance now can help your parents or siblings manage the costs associated with an accident or death.
- It can save your business. If you own a business, you’ll want to take good care of it. Unfortunately, all of your hard work will be at risk if something happens to you. Life insurance can aid business partners by supplying the right financial resources they’ll need to keep your business afloat after a loss. It’s an investment to protect the future of your company.
- A means to cover funeral expenses and pay off debt. Life insurance may seem scary because it’s associated with death. Yes, life insurance has death stipulations and will cover expenses related to that. That means, with life insurance, you or your loved ones are freed from the burden of death-related expenses. Plus, if debts are left, insurance can also help pay for those. And with any excess turning into cash for your beneficiaries.
6. Obtain a home mortgage
Gustavo Durango, senior economist with the Canadian Mortgage and Housing Corporation agrees that the young buyers today enter the market as they always have—in stages, but with different options available. “Owning a property is the number one way to ensure wealth,” he said.
The government has made it a little easier for first-time homebuyers to enter the market. So, If you’re one of those Millennials who want to buy a home but doesn’t feel like you have the credit score to do it, don’t despair. Follow these helpful home buying tips and you’re good to go:
- Find a broker you can trust. A good lender will inform you of the different mortgage options available and move the process along as smoothly as possible.
- Manage your loan payments. If you have a significant amount, say from college debt, you may believe that your student loans will prevent you from ever getting a mortgage and buying your first home. Lenders use a debt-to-income (DTI) ratio calculation to determine your eligibility for a loan. Optimizing your debt can improve your DTI ratio and allow you to qualify for a mortgage.
- Boost your credit score. Your credit score is an important factor in determining your eligibility to be approved for a mortgage. But by paying your bills on time, lowering your amount of debt, and limiting your credit inquiries will definitely help you to start improving yours.
In the midst of making career headway and creating families, I’m sure you’re beginning to make decisions about when and where to settle down and where to live. Don’t be satisfied as a renter. Your money just goes straight into a homeowner’s pocket. But if you buy a home, live in it and pay your mortgage, it is an investment that will sustain your living situation in the future. Put your money towards something that will reward you later down the road.
If you are in your early or mid-20s, investing matters much more than anything else to you now. As long as you want to be in this game for the long term, you have to learn the trade. For long-term success in investing, you can’t just chase after the “best” fish, without learning how to fish properly.
Even Warren Buffett, one of the most successful investors and richest men in the world, says that “Successful investing takes time, discipline, and patience. No matter how great the talent or effort, some things just take time: “You can’t produce a baby in one month by getting nine women pregnant.” Time is a very important asset of yours. Use it to your advantage. So, start investing wisely now!