With an estimated nine million millennials in the US, there’s a lot of pressure for this generation to get their finances in order. Unfortunately, a large part of the generation has trouble in that area. Millennials typically have less debt than older generations, but that doesn’t mean they are doing better with money. However, not all hope is lost for this generation. There are many ways that millennials can flourish financially if they take some intentional steps to make it happen. Here are four of the most critical moves to make to get on the right path.
1. Stop making minimum payments on your student loans
Making just the minimum payment required on your student loans will make your payoff timeline much longer than it has to be. Try using something like this multiple loan payoff calculator to determine just how much money you can save by making extra payments on your loans.
You can also always refinance your loan to get a lower interest rate and better terms. However, before you do that, you should do some research and find the best student loan refinance companies. The sooner you can get them paid off, the sooner you can put that money toward wealth creation and investing in appreciating assets like a home or business.
2. Stop focusing on meme stocks
The meme stock craze has led to overnight success stories where investors have become instant millionaires. While that might sound like the perfect way to get yourself on track toward long-term wealth, the truth is that meme stocks have ruined more finances than made millionaires. Unless you’re someone heavily invested in learning about the stock market and options, it’s best to play it safe and focus on long-term investments as the majority of your portfolio and only use a small portion of your investment budget to try to catch lightning in a bottle.
3. Stop avoiding contributing to your retirement savings
The sooner you make your retirement accounts a priority, the more you’ll capitalize on compound interest and grow your wealth. While retirement seems too far away to be a priority, don’t sleep on taking advantage of both the tax savings and interest-based growth that can grow your wealth by thousands every decade.
4. Stop avoiding creating an emergency fund
Many people avoid putting money away in an emergency fund until it’s too late and then have no option but to go into debt. Having an emergency fund makes it easier to maintain your lifestyle should something unexpected happen like a job loss or medical emergency. You can also apply for loans bad credit that is easily provided when you are in an emergency. It also helps keep you from making last-resort choices like using payday loans or cash advances on credit cards.
Those predatory cash infusions make it more challenging to get out of debt and can leave you stuck in a cycle of debt for years to come. Experts advise having at least six months’ worth of bills set aside in an emergency fund, but at the very minimum, aim to have $1,000 in your account.
The bottom line
It may not be simple to do, but with a bit of effort and focus in these four critical areas, millennials can become more financially stable and can more easily generate long-term wealth. If you’re a millennial looking to improve your financial situation, focus on one area at a time and track your progress to see just how quickly your finances can improve.