5 Wealth Management Tips for Millennials

Derek Notman |

It’s never too late to start saving. As a millennial, you’re either about to enter adulthood, or you may be in your late 30’s.

Therefore, building the resources you need to help you accomplish what you want in life is a must, but isn’t as complicated as you might think.

The issue with leaving it until a later stage is that the older you get, the more significant the portion of your income you’ll need to save and invest.

Primarily, the thing that stops most millennials from investing and saving is that the one-size-fits-all approach of yesteryear does not work for us. We have a desire for self-directed investing and are inclined to harness technology to achieve this.

Cutting-edge technology is an essential requirement for us, and thankfully, the financial services industry is catching up.

So, get excited about your money and use these 5 wealth management tips to enjoy life today and tomorrow!

       1.  Don’t Live Paycheck To Paycheck – Live for Today and Tomorrow

Easier said than done, sure, but try to determine where you can cut costs. This doesn’t have to be a large amount, but consider your lifestyle and decide on what’s crucial and what isn’t.

Where do you spend your money? Do you spend on going out, on clothing?

Start by tracking where you spend your money and then set realistic goals for yourself for saving.   Setting up a simple budget for your cash flow is a great way to see where you are spending your money and how to adjust it to meet your current and future needs.

Have you ever heard of the 50-30-20 rule? Try using 50% of your take-home salary toward needs like bills, groceries and rent and then 30% towards entertainment and wants, take the remaining 20% towards savings and investments. 

Doing this promotes healthy spending habits while not sacrificing how you want to live and enjoy life today, but also helps you set aside money for the future, older you.

  1. Harness Technology

Two things; machine learning and predictive analytics.

In 2019, investment companies are relying on complex machine learning algorithms more and more that data scientists are creating. These algorithms can find future patterns in the market by observing the trends in old data; essentially, they are learning from our habits.

Secondly, predictive analytics can predict your future financial condition. The AI algorithm predicts your future financial situation based on the way you have been spending and investing in the past.

AI is meant to enhance the customer experience and is growing more intelligent by the day. Use it to your advantage but be wary of who and where you share your information with. Additionally, check out these investment apps

  1. Start Investing Now & Diversify

Start investing now, even if it’s just $100 a month. A dollar in your twenties and thirties is more valuable than in your forties or fifties, thanks to the beauty of compounding.

As long as the market continues to rise, investments will compound. What does that mean? After ten years, an investment of $200 that grows at 4% annually will be worth $296, and $2,000 becomes $2,960, and so it goes.

Many millennials have been skittish to start investing given they grew up during the financial crisis of 2008 & 2009 and saw their parents lose a lot of money in a short amount of time.  This lead to a lack of trust in investing.  Thus it is very important to educate yourself before investing, so you know what you are doing, why you are doing it, and how it all works together.

The rules for how much you should invest really aren’t rules but guidelines that are driven by your specific financial situation, needs, and future. Whatever you can afford to start will work – it’s a starting point, and that’s what counts regardless of whether that is through your employer’s 401(k), IRA, or another avenue.

  1. Look For A Credit Card With The Lowest Interest Rate

We’re not condoning credit cards, as cash is always king, but they can be a useful tool when used correctly, so try to look for a credit card that has the lowest interest rate and no annual fee.

Cards that promise bonus points for a bunch of different things such as travel and fuel are tempting and can be very beneficial, as I spell out in this post about Delta Skymiles.

But if you don’t pay the card off each month then the bonus benefits are wiped out by interest; thus a low-interest rate is key in saving properly and much more crucial than any perks a financial service provider may offer you.

If holding credit card debt is a must for you at this point in your life, there’s a massive difference between a 10% cost and a 20% cost.

The biggest problem with credit is that you end up paying interest on interest and will battle to pay off what you borrow now in years to come.

It’s a difficult trap to escape and an even more treacherous space for navigating if you’re trying to save on top of that. It’s hard to make progress. We have enough bills already – why add to them?

The best way to live (and save) is within your means. If you can’t afford to purchase something without your credit card, then you can’t afford to buy it. 

Set up a delayed gratification board at home and save for items on there that are important to you.  Not only will you end up paying for them in cash, but you will feel a sense of accomplishment and even greater gratification by saving and buying this way.

  1. Establish A Relationship With A Virtual Financial Advisor

One thing that is for sure is that a Virtual Financial Advisor will make your life simpler and dealing with your finances less stressful. 

The number one financial mistake people make is not having a written financial plan. A VFA can help you build an actionable plan that looks at your life holistically, providing a road map on how to do all the things you wish to accomplish.

As millennials, our approach to investing and saving is different from other generations, and we have a different set of financial goals.

You’ll need a tech-savvy financial advisor that can cater to your individual goals, one who understands what it is to communicate in the digital age and one that can help you utilize the latest technology to the fullest.

This way, you can get the services & advice you want on your time, at your convenience, wherever you and the advisor are physically located.

This needs to be someone who knows your story, someone you can work with for life, having your best interest at heart.

The best part is that as this relationship builds, the advice you receive will be more personal and tailored.

Thank you for reading this post!