It’s what you’ve been looking forward to your whole life — graduation, starting a career, and having the dream job you’ve been planning for. Except, it may not have gone as smoothly as you hoped, you’ve accumulated a lot of student debt, and the industry in which you really wanted to work may not have been hiring.
Millennials are now the largest generation in the work force. They have to start thinking about their financial future — not just the next few years, but 30 or 40 years from now. How much money will you have? When do you want to retire? Will your nest egg last you long enough? Will you work part-time after retirement? Thinking about these questions now will save you lots of heartache later.
Here are some statistics to think about if you’re a Millennial — or you know one:
- 70% of Millennials are already saving for retirement in some fashion, but 81% are worried that Social Security won’t be around when they retire.
- Millennials carry about $1.2 trillion in student debt.
- The average Millennial will repay about $115,000 in student loans during their lifetime.
How do you plan for retirement when you’re not even sure if you’ll have enough money to pay back your loans or buy a small home? Here are a few tips to help you start planning for your future now:
- Learn to manage your finances today – With the rise of smartphones and the Internet has come countless ways to consolidate all your personal finances in one place. Search for a well-reviewed website to manage your savings account, checking accounts, loans, and retirement savings. When managing your money, knowledge is power. You can’t plan for the future if you don’t know where you are now. Knowing your credit score now and working to maintain a good credit score will help you save money in the future.
- Develop a budget – A budget need not be very detailed at the outset. Simply identify how much money you make, how much money you owe, and where you are spending your money. Use that as a starting point to figure out where you want your money to be going each month. Eventually, you can start budgeting your money toward savings. While a retirement account like a 401(k) or an IRA is key to a solid retirement, start with just saving money in a savings account if that’s all you can do.
- Start now – More important than the details of how you save or what you want to invest in is starting now. Saving for retirement now means you can save a smaller percentage of your income to reap the same rewards as saving a higher percentage a decade or two from now. Developing habits while you are young will prepare you for a more comfortable second half of your career.
- Have a backup plan – No matter how well you plan, unforeseen events still occur. Be flexible, and develop plans on how you’ll handle a serious injury, a job loss, or a spouse returning to school for a degree. Live within your means and you’ll be more able to absorb an unexpected cost or loss of income.
All Millennials will eventually retire, so why not start planning now? You’ll save time, money, and be able to achieve more of your goals with less stress.