Millennials, do you know deep down that you need to find ways to invest your money wisely but hear the word investing and immediately recoil? If so, you’re not alone. Your generation was financially coming-of-age as the recession of 2008 began. Even without understanding the specifics of the situation, millennials have all collectively become gun shy when it comes to putting their money anywhere other than safely in their savings account.
This attitude, while understandable, is doing millennials no favors and even threatens to create an entire generation that’s financially unprepared for their future and retirement. This might sound pretty grim, but don’t panic yet, there’s plenty of time to fix this, assuming you start taking action. If you’re entering the workforce and beginning to manage your own money, you need to start making plans to invest in your future right now to ensure that you can stay well above the poverty line later in life.
We have provided five easy steps to take that will help set you on the right path financially and encourage you to start investing in your future.
Five Easy Steps to Investing in Your Future
Decide on goals
Before wading knee deep into a financial plan, take the time to actually determine what your goals are financially. There are number of questions you can ask yourself:
- Where do you see yourself in 10, 20, 30 years?
- Are you going to get married, have kids?
- What kind of lifestyle are you hoping to have and what kind of money will you need to make that lifestyle a reality?
- When do you want to retire?
Start asking yourself these kinds of questions. Once you do, you’ll be able to start to create the rough outline you’ll need to figure out what kind investments you should be making today to so your future goals are obtainable.
Set up an IRA or 401(k)
It can be hard if you’re just starting your career to think about saving for retirement. You may say, “I’ll still be paying off my student loans for the next 10 years but you already want me to start saving for retirement?” However, if you wait until it feels like you have money that you can spare to invest in a 401(k), you’re already starting too late.
You’ll really be putting yourself at a disadvantage if the company you work for offers to match your contribution, but you don’t take them up on that. When a company matches your 401(k) contribution that means that up to a certain percentage of your salary, when you put money into your account, your company will put that same amount of money in. That’s essentially free retirement money that you’re throwing away. Set up your fund up today and contribute at least as much money as your company is willing to match.
When you set up your retirement fund, be sure to pick the one that makes the most sense for your future goals. For example, do you know the difference between a Traditional IRA and a Roth IRA? Do you know which one is recommended for someone in their twenties or thirties? If not, do your research before making your decision.
Create an emergency fund
No one knows when an emergency is going to happen. They aren’t convenient and there’s no way you’ll be able to plan for every possible scenario. But you can take precautions that will protect you and the people you care about.
The time to start saving for an emergency is long before it ever happens – not the day after. If you do have an emergency, you want to avoid having it completely drain you financially. Start putting a portion of your paycheck into a statement savings account every two weeks and save it away for emergencies. Hopefully you’ll never need to use it, but you’ll be really glad you have it if you do.
Ready to build your rainy-day emergency fund? We’ll show you how.
Do your research
One of the best steps you can take to ensure your financial future is to know what you’re doing. You don’t have to be a financial genius, but you should have a basic understanding of what you are doing with your money. Knowledge is power and if you can feel confident in your understanding of your financial situation you’ll increase your chances of success tenfold.
When working with your bank or financial advisers, make an effort to ask them to not just recommend what you should do, but explain why that is the best option for you. Seek out expert advice. It’s also important to remember that managing your finances is not something you can learn about once and then you’re set for life. It’s a process and as you grow, so should your knowledge of your finances.
Talk to the Experts You Trust
If you want to invest but have no idea what you are doing or even where to begin, there is no shame in asking for help. Visiting your local bank and working with financial experts who can give you individualized attention will provide you with the confidence you need to move forward with financial planning.
Union Community Bank employees are local experts and they will take a look at where you are starting financially, listen to your goals for the future, and help set you on the right path to accomplish them. Don’t wait to start investing in your future! If you think you might need a little assistance, visit your local Union Community Branch today.