Taking steps toward financial freedom and growing your wealth is an undoubtedly savvy move, and it’s never too early—or too late—to start learning how to use and invest your money. For millennials in their late 20s to 30s, this year is a great opportunity to make long-term investments and build a financial safety net.
Whether you are looking to buy a home, start saving for retirement, or simply learn more about investing, there are a few tips that can help you get started on your financial journey. Keep reading to discover six smart money moves for millennials.
Save for retirement.
If you are in your 20s and 30s, retirement likely seems like a light year away. However, it is essential to start saving for retirement as early as possible in order to avoid delaying retirement or having to set aside larger sums of money later in life.
Additionally, many employers offer an employer match 401(k) plan that can help you double your monthly investments. If you already have an IRA account started, a key investing tip to take advantage of is maxing out your 2022 retirement savings through April.
“Make a goal of maxing out your IRA for 2022,” said Nathaniel Hoskin, founder and lead advisor at Hoskin Capital, a wealth management firm. “You can contribute to an IRA up until you file your taxes, which for most is April 15. The single biggest mistake made by people in their 20s and 30s is missing out on a year of contributions to an IRA.”
Build a good credit score.
If you have debt in your 20s and 30s, now is a great time to eliminate it and start the new year off by getting rid of financial burdens.
High-interest debt can be an especially heavy financial burden, and it’s best to hunker down and pay it off as soon as possible. Be sure to evaluate your credit card debt and personal loans this year and eliminate these payments before making any major financial investments.
Boost your income
What better way to make more room for investments and a brighter financial future than by increasing your income? If you are struggling to set aside money for retirement or a new home and don’t have an emergency fund, it might be time to boost your pay.
Consider developing additional income streams, such as a side hustle, freelancing, or coaching. It may be helpful to consider areas you have expertise in already and how you can apply them in a monetarily beneficial way rather than learning something new.
Build an emergency fund.
It’s advisable to have an emergency fund in case of unexpected life events, such as losing a job or a medical emergency. Having an emergency fund can save you thousands of dollars and stress down the road, as it can reduce your likelihood of needing to borrow money or take out a loan.
“Establish an emergency fund of at least three months of expenses,” Hoskin said. “This is your “recession protection” so that a surprise expense or job loss doesn’t mess up your larger goals like buying a house or going back to school.”
Automate your finances.
If you are consistently forgetting to pay back credit cards, automating your finances can help you create a good credit score and make larger financial purchases in the future.
“Automate sending money to your investment account on the same day you get paid,” said Taylor J. Kovar, CFP and CEO at The Money Couple. “Automate bill pay to never fall behind on a bill. Automate paying off your credit card weekly. You will be so surprised at how much peace of mind this can bring to your financial situation.”
Grow your financial literacy.
One of the best gifts you can give yourself this year is investing in your financial literacy. Taking the time to learn about finances will leave you better prepared for the future and allow you to enjoy more financial freedom and preparedness.
“Invest in your financial education,” Hoskin said. “Whether it’s by buying a book or taking a course, the more you can understand your finances, the more confident you can become. This will also reduce the money spent on financial advice.”