A recent survey found that most “younger” millennials — between the ages of 18 and 24 — have less than $1,000 in savings and the majority have nothing saved at all. This generation isn’t taking the situation lightly however, as 57% of millennial employees report that they’re stressed about their financial state. Fortunately, if you’re in this age group you can make a few simple changes to your habits in order to meet your long-term financial goals. If you’re a young investor looking for ways to successfully build your wealth, here are four simple strategies:
Start retirement planning with your first job
If you’re currently in your 20s, you will have at least 40 years to accumulate retirement savings. You don’t have to start by investing a lot — every little bit counts and as you begin to earn more money, the more you can stash away. But it’s important to start sooner than later to take advantage of compound interest and give your money the most time possible to grow. Start by signing up for a 401(k) if your job offers it, or by diverting some of your paycheck into an IRA. The contribution limit for 401(k) plans increased to $19,000 in 2019, which amounts to a considerable chunk of savings. There are several different IRA plans, but the most common are traditional and Roth; both of which have increased 2019 limits of $6,000 if you’re under 50 years of age. Talk to your financial advisor about which plan is best suited for you.
Learn to live with less
The best habit you can develop is to pay yourself first. This means taking the money you earn and putting it into your savings and investment accounts, before spending the rest of your money on housing or other living expenses. If possible, it’s also a good idea to pay off your debts before touching the remainder of your money. It’s easier to build wealth when savings is a priority instead of an afterthought.
Prepare for the unexpected
As much as we try to control our lives, we never know what obstacles we will need to overcome. Prepare yourself today for any future crises by building an emergency fund to cover about three to six months of living expenses. We recommend using a high yield savings account where you’re gaining at least a small amount of interest on your money. You’ll thank yourself if you have to suddenly change jobs, deal with an illness or lose your steady income. You never know what’s going to happen tomorrow, so it’s best to be prepared today.
Reconsider risk tolerance
There is a common misconception that young people can stand to lose their money because they have many years to gain it back. However, at J.L. Bainbridge we believe that the key to wealth is steady upward growth over your lifetime. As Warren Buffet famously said, the number one rule in investing is don’t lose money. While fluctuations in the market are inevitable, if you invest to minimize risk and promote long-term wealth — you’ll be well on your way to a secure financial future.
If you’re a young investor looking to build or grow your wealth – call us today. We can help create a financial path that’s right for you.
The information being provided today is for educational purposes only and shall not be considered specific individual investment advice or recommendation. The information being provided is believed to be accurate at the time of distribution. However, over time may become materially inaccurate or may not apply to your specific circumstances. Please refer to our ADV for detailed information about our services and disclosures. You may request a copy of our ADV by contacting 941-365-3435. In addition, please refer to https://www.adviserinfo.sec.gov/IAPD for additional information on the firm and the Investment Adviser Representatives.