The oldest millennials will be turning 40 this year, and they’ve been faced with plenty of financial challenges along the way. This generation was just getting started in their careers as the Great Recession hit, and many have experienced job loss and other financial difficulties due to the COVID-19 pandemic. Younger millennials are now in their mid-to-late 20s, and may still be struggling to find their financial footing.
Whether you’re a younger or older millennial — or somewhere in the middle — it’s worth having some financial rules of thumb to refer to as you face new money milestones. Here’s some of the best advice for millennials courtesy of 10 of the top money experts in the country.
Get Financially Literate
Erin Lowry, author of the personal finance blog and book “Broke Millennial,” told CNBC that the first step in taking charge of your financial life is to get educated about money. If you don’t take the initiative to learn about finances before you have to deal with major money issues, “you will screw up and [have to] learn for yourself,” she said.
You can learn about finances from a number of sources, including textbooks, blogs, books and podcasts.
“Find out what speaks to you,” she said.
Define What a ‘Rich Life’ Looks Like for You
Danetha Doe, a financial psychologist and the creator of Money & Mimosas, said that understanding your own definition of being “rich” is a key part of being financially literate.
“Define what a ‘rich life’ looks like for you: look at your finances, health, relationships and desires, and get clear on what your dreams are in each area,” she told Authority Magazine. “Only then can you create a life worth living.”
Once you’ve done that, “create a vision board of your rich life: if you can see where you’re headed, it’s much easier to get there. Create a Pinterest board or poster board of your dreamiest, richest life and look at it regularly.”
Find Out: How To Live Rich on a Tight Budget
Always Negotiate Your Salary
Whenever you start a new job or get promoted into a new position, don’t hesitate to negotiate your salary.
“Asking for $55,000 instead of $50,000 early in your career could amount to $600,000 over 40 years,” personal finance expert Farnoosh Torabi wrote on Oprah.com.
Ask for 10% More Than the Average Base Salary
If you’re unsure what salary you should be asking for, use this rule of thumb: “Do some research on what the average base salary is in your field and ask for 10% more,” Mandi Woodruff, host of the “Brown Ambition” podcast, told Money. “Online resources such as Glass Door can provide a gauge of standard industry salaries.”
Track Your Spending
Scott Trench, author of “Set For Life,” told Denver’s KUSA that not tracking your spending is one of the biggest mistakes millennials make.
“Use apps to help you monitor where your money is going,” he said. “There are so many different options. Mint and Personal Capital are good examples.”
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Use the Debt Snowball Method To Pay Off Debts
Many millennials have debt, with the most common debt among this generation being student loans. You may also have a mortgage, credit card debt and/or auto loans. To tackle your debt, financial expert and host of “The Ramsey Show” Dave Ramsey recommends using the debt snowball method.
“List your debts, from smallest to largest (don’t worry about interest rates), and start attacking them with a vengeance,” he shared on his blog. “Once you get that first one paid off, roll that minimum payment into the next payment, and watch as it snowballs you toward debt freedom!”
How To Get Out of Debt: A Step-by-Step Guide
Focus on Saving for Retirement While Paying Down Debts
Although paying off debts may be your main focus, you should still be saving for retirement. Jill Schlesinger of the personal finance blog Jill on Money told CBS News that young millennials should aim to put aside 5 to 6% of their earnings for retirement while paying off credit card debt, auto loans and student debt.
“Older millennials [should] pay down remaining debt, but try to put aside 10 to 15%,” she said.
Make the Most of Your 401(k)
If your company offers a matching contribution to your 401(k) plan, be sure to at least max this out.
“I’ve seen so many people who are in their 401(k) plan for 3% when the match is 6. You can’t go back and get that money,” Barbara Ginty, financial advisor and owner of Planancial, told NBC News. “Getting the match and getting into your plan early will make a tremendous difference long-term because of the compounding of interest.”
Don’t Loan Money To Other People
Suze Orman told CNBC that millennials should never act as a bank to help out family or friends, noting that if you do “lend” someone money, you shouldn’t expect to get it back.
“Don’t loan money to anybody,” she said.
Orman also advised against acting as a co-signer, as this could make you liable if the other person fails to make payments on the loan, which could hurt your credit score and leave you with debt.
“Never, ever, ever co-sign a loan for anybody,” she said.
Buy a Home
As soon as you are financially able to go from renting to buying, you should do it.
Buying a home is “an escalator to wealth,” David Bach, the bestselling author of “The Automatic Millionaire,” told CNBC. “If millennials don’t buy a home, their chances of actually having any wealth in this country are little to none. The average homeowner to this day is 38 times wealthier than a renter.”
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