5 Advanced Money Skills Millennials Should Know, According to Experts
According to the Pew Research Center, if you were born between 1981 and 1996 you are widely considered a millennial. Currently, millennials are between the ages of 27 and 42. Many have started families and are at a solid point in their careers.
Financially, millennials are doing better than some of their generational counterparts. A 2022 Wealth Watch survey conducted by New York Life and reported on by CNBC found that millennials managed to achieve the “greatest overall savings” for the year. They stashed an average of $6,042.67 in 2022 but also reported a large amount of credit card debt. Millennials carried an average of $5,927.75 in credit card debt, not to mention they still have outrageous amounts of student loans.
Given the large amounts of debt that many millennials have, we asked experts to explain how millennials could firm up their finances. Here are the five advanced money skills that millennials should know, according to financial experts nationwide.
How To Save For Retirement
Saving for retirement may or may not be something millennials are doing right now depending on where they are in life, but every millennial should be doing it. Colin Palfrey, chief marketing officer for personal finance management company Crediful, recommends that millennials start thinking seriously about saving for retirement. “It may seem odd thinking about retirement before you have reached the peak of your career, but the earlier you get started the more comfortable a retirement you can look forward to,” he said.
He suggested that millennials “[s]peak to your employer about any plans they have available or look into opening an IRA, Roth IRA, or 401(k) plan. There will be a plan to suit your income and you will get tax benefits on your contributions to help boost your retirement pot.”
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How To Investigate Investments
Palfrey also said that millennials should not shy away from investing. “If you have spare money to invest it pays to investigate all the options open to you. There are plenty of resources to help you along and you can start with a very small contribution.”
He added, “Learning how and when to grow your portfolio could be the key to financial success. Make sure you have your retirement plan arranged before investing. Investments do carry risks but your retirement plan is secured.”
Entrepreneur and founder of personal finance website My Millennial Guide, Brian Meiggs agrees that investing early is key. He said, “Investing is one of the best ways to build long-term wealth, and starting early can make a big difference. Consider investing in low-cost index funds or exchange-traded funds (ETFs) that track the performance of the stock market. If you’re new to investing, it’s a good idea to educate yourself on investment strategies and risk management.”
If you’re not sure where to start, consider working with a financial advisor to get some guidance. Like Meiggs said, get educated and get started.
How To Negotiate
Negotiating isn’t just important when it comes to your salary. It can save you money in a number of ways. Millennials should learn the art of negotiation, Meiggs said. “Negotiation skills can be useful in a variety of financial situations, from negotiating your salary to negotiating the price of a car or home. Take the time to learn negotiation strategies and practice them in real-life situations.”
How To Use Credit Responsibly
“While every individual is different and should take the time to understand their own personal needs, there are some basic money skills that can help millennials get ahead financially,” said Donny Gamble, CEO of the financial literacy website Retirement Investments.
While these money skills include establishing an emergency fund, understanding how to utilize tax advantages and investing wisely, he also believes that millennials must learn to use credit responsibly.
“Credit cards can be incredibly helpful when used with caution and discipline. Use them to build credit or take advantage of rewards, but make sure to pay off the full balance each month to avoid costly interest charges,” he said.
How To Automate Finances
This might not seem like a more advanced skill, but it is often overlooked. However, automation is a savvy way to stay on track and hit your financial goals. Gamble explained, “Setting up automatic transfers into savings accounts and automated payments on bills is an easy way to ensure that finances are managed without spending extra time on it or having money slip away due to negligence or forgetfulness. Automation also helps with budgeting and makes sure that expenses are taken care of in a timely manner.”
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