Money Moves for Millennials

Aug 17, 2021 | All Posts, Blog | 0 comments

If you’re like most millennials, you may feel discouraged by the current state of your finances. Millennials have grown up in a digital age, and are constantly bombarded with new opportunities to spend. We want to provide you with some smart money moves for millennials like you that will put you ahead of the curve. But first, here are some surprising (or not-so-surprising) statistics:

  • About two-thirds of millennials say they’re living paycheck to paycheck. 
  • Over half are still receiving some form of financial help from their parents. 
  • Seven out of ten consider themselves financially stable if they can pay all of their bills each month. 
  • 48% would spend more than they can afford to hang out with friends. 
  • Less than 1/3 have an emergency fund.

These facts may be discouraging, but the good news is: you don’t have to be the norm! With these wealth-building money moves for millennials, you can beat the odds and be on the path to financial freedom.

1. Create a budget

One of the first and most important money moves that anyone can make is having a budget. Whether you make $20,000 per year or $120,000, a budget will allow you to allocate your money and know where each hard-earned dollar is going. If you want to set yourself up for financial success, don’t wait to create a budget.

Budgeting requires taking account of all of your income and allocating it to your expenses. There are different methods to budgeting, and plenty of great resources to help you out. Zero-based budgeting is a great way to get started. For specifics on how to start and keep a budget, check out this post. An app such as EveryDollar or You Need a Budget can also be a big help.

2. Automate your bills

Automating your monthly bills is a great way to make sure that you won’t get hit with extra fees if you forget to send a bill in on time. Even the most responsible people slip up sometimes and forget to pay the bills. Don’t take any chances! Automating your bills will not only protect you from any possibility of late fees, but it will also save you a little bit of time each month. Some businesses even give you a slightly lower rate when you sign up for automated billing.

3. Build an emergency fund

If you’re serious about getting on top of your finances, one of the first things you should do is build an emergency fund. With almost two-thirds of millennials living paycheck to paycheck, most would be in a crisis if they suddenly lost their job, totaled their car, or had a medical emergency. An emergency fund is a safety net for unexpected emergencies in life.

If you have consumer debt, start building up $1,000 in your emergency fund. Once your debt is paid off, aim to have enough for 3-6 months of expenses in your emergency fund. Our blog post on budgeting will show you how to start budgeting for your emergency fund.

4. Drive a clunker

Car payments are often a top expense for millennials. Cars always depreciate—and quickly. However, new cars lose their value much faster than used cars do. Carfax estimates that a new car is worth hundreds (sometimes thousands) less before you even get it home. In the first month, it will lose 10% of its value, and in the first year, about 20%. In just five years, the average car will be worth only 40% of its purchase price.

Instead, do your research and buy a reliable, used vehicle that you can afford to pay for with cash. You may not look as cool as your friends, but you’ll save THOUSANDS in the long run (which is pretty cool). Instead of a monthly car payment, set aside what you would spend on a car payment in a “car fund”. When you have enough cash in this fund to upgrade your vehicle, go ahead.

5. Get rid of debt

Consumer debt, including student loan debt, is a giant drain on your finances over time.  Your best bet is to get it paid off as soon as possible. According to a recent Bank of America survey, “Seventy-six percent of millennials carry debt of some kind, with 16 percent owing $50,000 or more, excluding home loans. Of those with debt, 76 percent say they can’t achieve their personal and financial goals because of it.”  Another study found that 14.8 million millennials have student loan debt, and millennials average a balance of $38,877 per borrower. 

We recommend getting serious about paying off your debts as soon as possible. The sooner you pay off your debts, the sooner you can start accomplishing your goals and saving for retirement and other future expenses. While it may feel overwhelming, paying off your debt IS possible with hard work, penny-pinching, and motivation. The debt snowball method is a highly effective way to pay off your debts—and quick. Read about it here. 

6. Pay yourself first

No, we don’t mean spending your paycheck on lattes and movie tickets before paying your bills. If you have a fully-funded emergency fund and have paid off all of your debt except for your mortgage, start investing at least 15% of your household income in retirement. Each time you budget, pay into your retirement fund BEFORE paying for any extras. If you start at age 25 and save 15% of your paycheck toward retirement (in total, including any employer contributions), you’ll likely be in a great place as your retirement years approach. If you’re a higher earner, start at a later age, or have grand retirement plans, you’ll need to invest more than 15%.

7. Figure out how much you need to make

Speaking of retirement plans, now is the best time to start thinking about how you’re going to spend your retirement years. When you’re planning and investing for retirement, you’ll need to figure out what “enough” looks like for you, and work backward from there.

If you plan to spend the later years of your life traveling the world and staying in 5-star hotels, your financial needs will obviously be higher than someone who wants to stick close to home and go fishing with the grandkids. Perhaps traditional retirement isn’t even in the plans for you. Maybe you want to take a few years off here and there. This would make conventional retirement wisdom totally wrong for you. Think about the roadmap that makes sense for you before starting to follow it.

If you have an idea of your retirement wishes, you can figure out how much you’ll need to invest starting now. Then you can decide how much you’ll need to earn to make that a reality.

Get ahead of the curve with these money moves for millennials

Remember, you don’t have to fall into the norm for millennials when it comes to your financial decisions. Make wise choices now, and they will pay dividends later.

At Milestone Wealth Management, we want you to feel ready for whatever the future brings. We believe your goals can be much bigger than living paycheck to paycheck. If you want to be prepared for life, retirement, and beyond, contact us today. We’d love to help.


This material is not intended to replace the advice of a qualified tax advisor, attorney, or accountant. Consultation with the appropriate professional should be done before any financial commitments regarding the issues related to the situations above are made.

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