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?
Sign up for Kiplinger’s Free E-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.
-
Stock Market Today: Dow Dives 1,679 Points on Trump Tariff ShockU.S. stocks lost roughly $3.1 trillion in market cap on Thursday – the biggest one-day decline since the start of the COVID-19 pandemic in March 2020.
-
Did Florida’s Chance at $1,000 in Property Tax Rebates Vanish?State Taxes The Florida Legislature bypassed Gov. Ron DeSantis’ wish to cut property taxes and instead voted to lower the state’s sales tax.
-
When Your Car Is Fixed, But You've Still Got the ProblemThis reader's experience with trying to get squealing brakes fixed under an extended warranty mirrors what others are experiencing these days.
-
Seven Questions to Ask When Evaluating Personal Loan OptionsTaking out a personal loan too hastily could lock you into unfavorable terms with an untrustworthy lender. Ask these questions before signing anything.
-
What Can a Donor-Advised Fund Do for You? (A Lot)DAFs and private foundations go about helping charities (and those who donate) in different ways. Each comes with its own benefits and restrictions to navigate.
-
Is Chasing the American Dream Ruining Your Financial Life?Too many people focus on visible affluence as a marker of success. Here's how to avoid succumbing to the pressure and driving yourself into debt.
-
Charitable Contributions: Five Frequently Asked QuestionsMake the most of your good intentions by understanding the ins and outs of charitable giving. A good starting point is knowing what's deductible and what isn't.
-
Can You Be Fired for Going to Work When You're Contagious?What's an employer to do when an employee shows up at the office with a cold or the flu and spreads germs to co-workers?
-
Are You a High Earner But Still Broke? Five Fixes for ThatIf you're a HENRY (a higher earner, not rich yet) but feel like you still live paycheck to paycheck, there are steps you can take to get control of your financial future.
-
Five Things That Are Spiking Your Insurance PremiumIt's a drag, but just as your expenses keep rising, so does the cost of doing business as an insurance company. That means higher premiums.
