How can I get a jump start on financial freedom?
Many of our clients either have children who are Millennials or are Millennials themselves. It’s a complicated time of life, and sometimes more sophisticated planning is in order. However, here are seven quick tips anyone can implement today.
- Take the free money. Make sure you are getting your company’s full match on your 401k and taking advantage of gym membership reimbursement and any other perks. Your apartment building has a gym? Use it.
- Audit your expenses. For example, that unlimited yoga membership you are paying $150/month for isn’t worth it if the drop in rate is $15 and you are only going 6x a month. You are wasting $60/month. Change to the drop-in rate until you prove you can commit to getting your money’s worth.
- Pay yourself first. Treat savings like just another bill. Make savings automatic by setting up an automatic draft every payday from your checking account to an emergency fund, retirement account or investment account. Bonus points if you add the $60/month you saved on your yoga membership to your monthly savings!
- Attack debt. So you have a 15-year college loan at 6.8% on $25,000 with a $222/month payment? Try to pay at least a little more! If you can pay $300, you’ll pay your loan off 5.5 years early and save over $6,000 in interest! Bonus points if you split the payment into bi-weekly payments of $150, preferably coming out on the days you get paid. Paying more frequently means less compounding of your interest, so you’ll pay the loan off even sooner!
- Delay vanity purchases. Driving a fancy car and having expensive clothes and accessories at 25 years old won’t often make you look successful and fashionable. It will make you look entitled and unwise. Depending on your field, you be expected to up the ante in a few years, but push that out as long as you can.
- Pay for quality and to avoid disasters. Saving is good, but don’t save a dime now when it will cost you a dollar later! That means don’t skip the dentist, and don’t wait till you feel like you have a lot of money to look for financial advice. It’s never what you know that hurts you — it’s what you don’t know and don’t see coming. The biggest mistake I see people make is waiting until they are about to retire to look for an advisor. The hardest part of my job is sitting down with someone who has $1 million and yet seeing millions of dollars in financial mistakes they made because they didn’t want to pay someone for advice. That’s no different than saving $100/year on dentist visits for 10 years only to have your lack of care cause you to need a $15,000 surgery that could’ve been avoided.
- Don’t try to be an expert at everything. The economy is more specialized than ever. Spend your time trying to differentiate yourself instead of trying to do it all. It’s not just years of experience, it’s hours of experience, and even more so, what you accomplished in those hours. Work on what you love and what you have natural ability at and either hire out or ask for help on the rest.
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