Four financial mistakes Millennials make
The oldest Millennials turn 40 this year! While they are now another year wiser, they are running out of time to build wealth before retirement. Local financial professional Barry Bigelow from Great Waters Financial shares four financial mistakes Millennials make and how to fix them.
Bigelow says that Millennials savings goals are falling behind because older millennials have faced unique challenges like rising college costs, slow wage growth, working during a recession and a pandemic. In addition to paying down mountains of student loan debt, they are planning for retirement while also saving for their children’s education. More than 75% of millennials say they would prioritize their kids’ education over their own retirement.
when it comes to the top mistakes this age group makes, Bigelow says four stand out.
NUMBER ONE: LIVING ON BORROWED MONEY
Almost 60% of Americans say debt is holding them back from accomplishing milestones such as buying a home, getting married, having children and saving for retirement.
If you have student loans, credit card debt, a car payment and a mortgage, it can be difficult to decide what to tackle first.
Create an inventory of all your debts, including how much you owe and the interest rates you’re paying.
Calculate how much you can afford to put toward your debt each month and concentrate on paying off one debt at a time, while still making minimum payments on your other debts.
NUMBER TWO: NOT HAVING A BUDGET
A budget allows you to set aside enough money to cover your student loans, bills, short and long-term savings goals while still having enough left over to live comfortably.
Whether you go with an app or the old-fashioned pen and paper, what’s important is that you know where your money is going.
The goal is to have more money coming in than expenses going out.
To help you get started, I have a budget worksheet on my website, greatwatersfinancial.com.
NUMBER THREE: FORGETTING TO PLAN FOR LONG-TERM CARE
The number of people needing long-term care will double from 7 million to 14 million by 2065.
Healthcare will likely be one of your biggest expenses in retirement. If we can stay healthy, we can keep more money in our pockets.
A typical policy will help pay for adult daycare, respite care, and stays in Alzheimer’s special care facilities, assisted living facilities, nursing homes and hospices.
Typically, the younger you are when you purchase the policy, the lower the monthly premium.
NUMBER FOUR: FORGETTING ABOUT RETIREMENT
Make sure you are taking advantage of your employer-sponsored 401(k), or start your own retirement account.
A good rule of thumb is to put away 10-15% of your salary into a 401(k) or IRA. This is money that is dedicated to retirement – you should not be withdrawing from it early for yourself or your kids.
Working with people in and nearing retirement, I see first-hand the benefits of making retirement a priority.
It may seem difficult to save for retirement when you’re paying down debt. However, there are ways to work it into your mindset and budget.