Millennials: Here’s Your 25-Step Financial To-Do ListBuilding Wealth
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When I graduated from college in 2009, I didn’t have much of a financial plan. I just knew that the economy was in the toilet, I had $35,000 of student loans around my neck, and that I had to hustle my butt off to get ahead.
And I did. And now here I am, running a blog that makes me thousands of dollars a month, telling other people how to take control of their financial life and having fun doing it.
But it wasn’t an easy path. And looking back, wow, I wish someone would’ve come alongside me and told me what I’m about to tell you in this blog post.
So are you ready for your 25-point financial to-do-list? Let’s get to it.
These are the simple things that everybody should do right now, today, ASAP.
1. Check your monthly fees.
There are few things in life as frustrating as bank fees. Why are they so frustrating? Because they are extremely easily avoidable. So make sure you understand your bank’s fees!
2. Start investing in dividend-paying stocks.
We love dividends here at Money Done Right.
When you invest in a dividend-paying stock, you are acquiring a portion of a company that somebody else built and that thousands of other people work for, and they are giving you a portion of their profits. Blows my mind!
There are plenty of great places to open up a stock-investing account, but the one that’s getting us hot and bothered at the moment is Ally Invest.
Ally Invest is great because you can trade dividend stocks for as little as $3.95 per trade compared to $6.95 at E*TRADE and Charles Schwab.
Ally Invest has developed a pretty amazing platform, and no matter if the stock market goes up or done, we still get dividends deposited into our Ally Invest account every quarter!
3. Find a side hustle.
Everybody needs a side hustle. It is easy to make good money on the side if you know the right opportunities. And whatever extra money you make, don’t blow it. Invest it. Future you will thank you. You can get started with this list of 100+ side hustles you can start today, many of them from home!
4. See if you can get a lower interest rate on your student loans.
When you went to college, your student loans were assigned a certain interest rate. However, now that you’re out in the real world and working a real job, you can likely qualify for a lower rate. Check out the article below for how to do this.
5. Check your credit score.
Your credit score can truly determine your financial destiny. There are many places online where you can check your credit score for free, but we like Credit Sesame because it’s quick and easy.
6. Calculate your net worth.
If you haven’t done this already, figure out your net worth. Your net worth is what you own (your assets) minus what you owe (your liabilities), and its trajectory is the single most important indicator of your financial well-being. Personal Capital is a great tool to help you automatically update your net worth every month.
7. Create a budget.
If you’re serious about cutting your spending so that you can free up money to pay off debt and invest, you need to stick to a budget. It’s a non-negotiable. Check out the article below for some guidance.
8. Evaluate your health insurance options.
If you don’t have health insurance, you’re playing with fire. All it takes is one accident to ruin your financial future if you’re not insured.
So learn about your options and make sure you have the insurance coverage that’s right for you.
9. Evaluate your auto insurance options.
Like health insurance, car insurance is a must if you own a vehicle. Not only is it required by law, but it can save your skin from financial disaster. As someone who recently got into a pretty bad car accident, I know this first hand.
10. Evaluate your life insurance options.
As Millennials, we’re young. We don’t like to think about death and dying. But something to consider is that life insurance is much, much more affordable the younger and healthier you are when you purchase it. If you are a non-smoker with few or no pre-existing conditions, a substantial life insurance policy can be very inexpensive.
The Next 3: Look Into These Money-Saving Hacks.
The items below give you three ways to make small wins in your financial life by saving $5 here or $10 there. And if you know anything about me, you know that when it comes to money, I believe in the small wins. I truly believe that for people in their 20s and 30s, every penny counts. Why? Because we have the advantage of time. Every dollar that we put into paying down our debt or investing at a 7% rate (compounded daily) will double in 10 years and eight-tuple in 30 years. So when I make an extra $50, I don’t just see $50; I see $400 in 30 years.
11. Use Ibotta to save money at the store.
Ibotta’s a simple, easy-to-use app for your phone that gives you cash back via Paypal on everyday items that you would purchase anyway. It’s really a no-brainer if you go to the store at all. Also, if you sign up through my Ibotta $10 Sign-Up Bonus Link, you’ll receive a $10 sign-up bonus!
12. Use Ebates to save money on online purchases.
What Ibotta is to brick-and-mortar shopping, Ebates is to online shopping. And like Ibotta, Ebates is a no-brainer. All you do is go to Ebates, search for the name of the store you want to shop at, click the link to that store, and shop as usual. You will receive cash back ranging from 1% – 40% depending on the store. Also, if you sign up through my Ebates $10 Sign-Up Bonus Link, you’ll receive a $10 sign-up bonus when you spend your first $25 through Ebates!
13. Use Gift Card Granny to save money by using discounted gift cards.
Discounted gift cards are pretty much a way of life for me now. Whenever we go shopping or out to eat, you’d better believe I’m checking to see if I can get 5%, 20%, or even 40% off with a discounted gift card. How do I do it? Check out my example post using The Coffee Bean & Tea Leaf as an example.
The Next 9: Do These in this Order.
Completing these next eight items may take you years to accomplish, but don’t give up! I hope that seeing the road ahead can motivate you to save money so you can knock out one goal and move to the next.
14. Build a small emergency fund of at least $1,000 or 1 month’s living expenses.
It’s foolish to go through life without an emergency fund. You need at least $1,000 or 1 month’s living expenses to cover you in the case of a rainy day. If you have a lot of debt, I would put your goal for this small emergency fund at 2-3 months’ worth of living expenses (including payments on your debt).
15. Contribute the maximum matched amount through your employer’s retirement plan (and no more at this point).
This is just plain old free money, folks. You’d be silly to not take advantage of that. And don’t think this is confusing. Just call your human resources department and ask whom you should speak with about getting the maximum retirement plan match from your employer. They get this question all the time, so they will surely have an answer ready for you.
16. Pay off any high-interest debt. I define “high interest” as having an interest rate of 10% or higher.
Many people with high-interest debt don’t really understand how quickly the interest can accumulate on it. The result? A lifetime of servitude to high-interest debt or even bankruptcy, which can set you back years on your path to financial freedom.
17. Build a larger emergency fund of 3-6 months’ of living expenses.
Once you’ve paid off your high-interest debt, it’s time to sock a little bit more away in your emergency fund. If you don’t, you could very well find yourself in a position where you need money fast in case of a job loss or life-changing emergency, and you could land yourself right back with thousands of high-interest debt. Don’t risk it; expand your emergency fund.
18. Pay off any medium-interest debt. I define “medium-interest” as having an interest rate over 5%.
After you’ve increased your emergency fund, you can go ahead and knock out medium-interest debt. Again, interest can really add up!
19. Open up either a traditional Individual Retirement Account (IRA) or a Roth IRA and contribute the maximum amount for the year.
IRAs are extremely powerful wealth-building tools due to their tax benefits. I’ve always made it a point to contribute the maximum amount to my Roth IRA, and even after my income exceed the income limitation limits, I used a “backdoor” IRA to still make Roth contributions.
I recommend Wealthsimple to open up your Traditional or Roth IRA. Currently, Wealthsimple is also offering Money Done Right readers an exclusive $50 sign-up bonus. To get this bonus, click here to sign up through our Wealthsimple $50 Sign-Up Bonus link.
20. If you have a qualified high-deductible health plan, set up a Health Savings Account (HSA) and contribute the maximum amount for the year.
There are differences of opinion on this, but I believe that you are young and relatively healthy, you should consider opting for a high-deductible health plan. Why pay for insurance that you’re likely not to need? And the glory of having a high-deductible health plan is that you can open up an HSA. And the beautiful thing about an HSA is that the money you put in is tax-free, and also take money out tax-free to cover medical expenses.
21. If you have children for whom you would like to assist with their college education, look into educational plan options and contribute accordingly.
Examples include 529 plans and Coverdell Education Savings Accounts.
22. Save for any large purchases that you want to make.
What these large purchases are, if any, is completely up to you. This could be saving for a car, a down payment on a house, or a trip. Depending on your goals, it may make sense for you to invest at least some of your savings for the large purchase in low-cost index funds (see Step 22 below).
Now Build Massive Wealth Like This.
By this point, you’ve laid a serious foundation for your financial future. Congrats! Now you can move onto building massive wealth. And the best part is that once you get started with wealth building, it snowballs like crazy.
23. Invest in low-cost index funds.
If you still have money left over after doing everything above, put it into low-cost index funds. You can do that through the Ally Invest account you opened in Step 2 above.
24. Invest in real estate.
Most young people’s notion of a landlord is that of a stodgy middle-aged man or woman banging on the door every month to collect rent. Cross that out of your mind. I became a landlord in my 20s, and you can too. Oh, and I don’t spend any time banging on my tenants’ door every month to collect rent; I chose great tenants who pay me every month electronically, saving me time and gas! If you put systems in place in your landlording business, it can be a breeze.
25. Start a business.
Entrepreneurship is the #1 way to take control of your financial future. It’s not for everybody, but if you want to make life-changing wealth, you need to start a business.
Bonus: And Do This Every 6-12 Months.
26. See if you can refinance any debts you have at a lower interest rate.
This is more relevant if you’re still at Step 15 or before, but it doesn’t hurt even if your debt is only medium-interest or only low-interest. The less money you pay for renting money, the better, right?
Well, There You Have It.
So get to it!
What financial goal are you working on right now? Let me know in the comments!
Logan is a practicing CPA, Certified Student Loan Professional, and founder of Money Done Right, which he launched in July 2017. After spending nearly a decade in the corporate world helping big businesses save money, he launched his blog with the goal of helping everyday Americans earn, save, and invest more money. Learn more about Logan.