There’s no doubt that millennials face significant financial challenges, including high debt levels and slow job growth. But with the right tools and strategies, they can set themselves up for success.
Whether you’re just starting out or ready to start a family, it’s important to make smart money moves that will help you build long-term financial security. Here are six of the most important ones:
Pay Off Debt
Many millennials carry substantial student loan and credit card debt, which can hinder their ability to reach their financial goals. It’s crucial to prioritize debt repayment and explore options like refinancing or consolidating loans to secure lower interest rates. In addition, it’s a good idea to work toward becoming debt-free as early as possible, so you can focus on building savings and investing for the future.
Create an Emergency Fund
It’s also a good idea for millennials to save enough money to cover three to six months worth of living expenses in a savings account. Life’s uncertainties, such as a job loss or natural disaster, can quickly throw a wrench in your financial plans, so having an emergency fund will give you peace of mind that you’ll be able to cover unforeseen costs. You can start by focusing on paying with cash instead of using plastic and setting aside a portion of each paycheck to put into savings.
Start Saving
Millennials should be sure to set aside a portion of each paycheck to invest in retirement accounts, such as 401(k)s and individual retirement accounts (IRAs). The earlier you begin saving, the more time your investments have to compound. Additionally, millennials should try to max out their employer-sponsored retirement accounts, such as a 401(k) or a 403(b).
Review Insurance Policies
In addition to having an emergency fund, it’s also important for millennials to review their insurance policies. This includes health, life, and disability insurance, which can provide a safety net in the event of an unexpected expense or loss. In addition, millennials should consider purchasing home, auto, and renters’ insurance to protect their possessions and belongings.
In this episode of Nerdwallet’s “Smart Money Moves” podcast, we take a deep dive into the financial struggles faced by millennials and offer suggestions for how to overcome them. Plus, we discuss the ways in which millennials are redefining traditional milestones and reimagining what it means to be successful.