millennial-financing-planning
Updated October 16, 2020

The Full Millennial Financial Planning Guide: From Family to Investing and Retirement

Building Wealth

Money Done Right does not accept sponsorships to promote particular products or services. However, we may receive a commission if you purchase or sign up through links on this page. Here's more information about how we make money.

Whether you’re in your twenties or thirties, the simple fact that you’re reading this line suggests you’re having trouble planning your finances. Don’t worry, most of the 83 million millennials in the country are in the same situation. Our millennial financial planning guide will help you make things better.

We recommend applying it as soon as possible, as the sooner you begin, the easier reaching your financial goals will be. Time will not be on your side for long.

Most Important Thing to Consider

You have to think about starting a family and planning your retirement. Unlike the previous generations, you want much more from your life, and that cannot be easy to obtain, especially when you live in an unfriendly environment that only seems to pose challenges. If you want to succeed, you need to get organized, set clear goals, know your obstacles, and fight hard to overcome them. That is what our guide will help you accomplish.

How do we know it will work? We built it starting from your own priorities and behaviors. It provides more than financial advice for millennials. It identifies the challenges you face and provides effective solutions to overcome them.

Why Our Millennial Financial Planning Guide Will Help: We Know You and Your Challenges

We wanted to know what you, millennials want from life, what your goals are. We did our homework, reviewed stats and reports, and reached the following conclusions:

millennial financing data

1. Quality And Intrinsic Value Mean More to You Than a Label or a Price.

According to Gallup, millennials are the least engaged with brands and specific merchants (25% compared to 28% of generation X, 33% of baby boomers, and 47% of traditionalists). They do their research, compare prices, read labels, and choose the best offers.

This tells us you don’t need people telling you where to shop, but some effective advice on how to get the most value for your money may come in handy. We’ll take care of that in the following lines.

2. You’re Mindful about Your Spending, but You Care about Comfort and You, Occasionally, Act on Impulse

While 71% of millennials compare prices online looking for the best deals, compared to 55% of older generations, only 50% of millennials use coupons, compared to 60% of older generations (Gallup).

Only 34% of older generations buy on impulse, compared to 47% of millennials. However, millennials’ daily spending is still lower than in 2008 (Gallup).

This tells us that you care about your comfort more than you do about the savings coupons enable, so you need easier access to coupons. Although you’re usually mindful about how you spend your money, you want to be able to cater to your occasional whims.

In the following lines, we’ll teach you how to get coupons with a single click and how to save money so that you may afford to buy on impulse whenever you feel like it.

3. Your Debts Are a Major Strain on Your Budget and Have Forced You to Make Compromises

Millennials are buried in debts. Apparently, 63% of them owe more than $10,000 in student loans. According to Gallup, debts have pushed millennials to postpone:

  • Major purchases, like vacations, home improvement projects, or expensive appliances (54%)
  • Buying a car (44%)
  • Continuing their education (37)
  • Buying a home (28%)
  • Moving out of the family home (20%)
  • Getting married (17%)

Also, financial difficulties forced 24% of millennials to accept jobs they would not have taken otherwise and determined 14% of millennials to pass down jobs they would have wanted. Compared to the older generations, millennials start families much later.

This tells us you’re careful and able to make sacrifices for the things you want and need. It also suggests that one of the most important steps towards your financial freedom will be to pay out your debt. Once you escape their burden, the rest will be a piece of cake, we’ll make sure of that.

4. You Care about the Future, but Not Enough to Sacrifice the Present

With all the strain on their budget, millennials seem to have a hard time-saving money for their retirement. Almost 60% of working age individuals have not saved anything for their retirement, and the median balance of all working-age Americans is $0.

Yes, that is worrying, especially since the future does not look bright as far as social benefits are concerned. However, should you put your life on hold or sacrifice everything to save for old age?

Most members of your generation don’t do it. They prefer to live life to the fullest and do that by participating in live concerts, festivals, and sports events (82%). Fear of missing out affects 69% of millennials.

You shouldn’t miss out on the present; you should have fun and enjoy the present. But you should also save for your golden age. We know how you can do both and we’ll cover everything in our financial tips for millennials.

5. You Worry Too Much about Money and Your Future, and Stress Is a Major Threat to Your Health

Money is a cause of chronic stress for nearly half of millennials, and 74% are pretty sure they’ll have no social security benefits to rely on for retirement. It makes sense, considering the numerous threats and obstacles this generation is facing.

However, if you start early and follow our lead, money will no longer be a problem, and your future will be secured. If there’s one thing we know about millennials is that you’re smart, able to think for yourself, and up to date with technology.

You’re open to ideas, but you also do your homework. You take your future into your own hands. That is what we’re betting on, and that is the premise on which we’ve built this guide.

We’ll be offering you ideas and solutions that you can test and apply to your own situation, at your own pace. However, in order for these ideas to work, you need to be fully aware of your situation, of your perspectives, of what the future has in store for your generation. We call it preparation, and it represents the motto of our guide.

Our Millennial Financial Planning Guide Motto: Hope for the Best but Prepare for the Worst

In order to succeed, you need to be prepared for the challenges life and society will throw your way. You need to know what problems to expect and how to solve them. Here is what our data suggests:

· Don’t Rely on Economic Growth

OECD projections set the main index for economic growth, GDP (gross domestic product) at around 2% annually for the period 2010-2060, which is more than three times lower than the average for the period 1960 – 2010 of 6.86%.

· Don’t Let Your Financial Security Depend on Your Job Alone

The jobs of nearly 50% of American workers are at risk for automation. It makes sense, considering that we buy and book everything online, get our coffee from machines, and see the agriculture and manufacturing sectors relying more and more on equipment instead of workers.

Sure, you can get a job in a sector with a lower risk of automation, but what if you lose your job? Make sure you have another way to support yourself.

· Don’t Count on Social Benefits

As a taxpayer, you take certain rights and benefits for granted. Well, they won’t be available for more. The Securities and Exchange Commission warned just last year that a retirement crisis resembling a tsunami is approaching.

The Social Security trust fund will be drained by 2034, and the U.S. retirement savings system has already registered a gap of $30 trillion that will continue to increase by another $3 trillion every year.

· Don’t Rely on Savings Alone

You work hard, and you try to put money aside. However, there is only so much you can do. Saving enough money for retirement and other needs is literally impossible.

If you want to secure your future and afford major purchases, you have to invest, make your money work for you. We’ll discuss how you can do that in the following lines.

· Start an Emergency Fund

It doesn’t matter how much you earn and spend, how lucky or cursed you occasionally feel, you need to save for emergencies. What if you get sick or injured and your health insurance won’t cover treatment? What if you lose your job, your home, your car, or your ability to work?

You should have some money to turn to when things get tough without getting into debts or having to cut back on your expenses for years. We recommend that you keep at least three paychecks in your emergency fund and put back any money you spend from it.

At this point, you’re surely thinking that theory is easier than practice and you can’t start an emergency fund without money, but we have financial advice for millennials in this situation, too.

Now that you have a better understanding of what’s out there, it is time to look at your motivations, at the object of your planning. In order for your efforts to pay out you need clear, valuable, smart goals.

I. Millennial Financial Planning: Guide to Goal Setting

You want many things from life, and that’s great. However, you cannot accomplish everything at the same time, so you need to set priorities.

You know what matters more for you and why you started looking for financial advice for millennials, but here are a few goals we recommend pursuing if you haven’t accomplished them already:

  • Start the emergency fund – We already discussed its necessity above, so we won’t get into further details.
  • Buy a home – Rent nowadays is so expensive that it makes more sense to pay the mortgage You can then make money with your home by turning it into your workplace or renting out a room.
  • Get a car – Driving is often cheaper than other alternatives, not to mention the added comfort and convenience. Besides, there are ways to make money with your car as well.
  • Pay for your wedding – Weddings can cost a fortune these days. If you don’t start saving in due time, you may have to wait until old age to have yours. Traditions according to which a particular side should cover the expenses are long forgotten.
  • Save to have a baby – Many millennials delay the event due to lack of money, and parenthood can be costly, but it is rewarding too. Even if you’re not yet there, preparing for the event can’t hurt. You can always redirect your savings to another goal.
  • Start your own money-making business. Statistics present millennials as disengaged and dissatisfied with their jobs. If you fit the profile, you should consider starting your own business and leaving the job or workplace you hate.
  • Save for retirement – We’ve already explained above that you are on your own, as there will be no security benefits to rely on when you retire. According to estimates, you’ll need at least $1 million. Saving that kind of money takes time, so you’d better start early.

Now that you know what you want, let’s see what you have to do in order to obtain it!

II. Millennial Financial Planning: Guide to Saving Money

This part of our guide provides easy to follow and effective financial tips for millennials to save money. They will work in any situation, for literally anyone.

However, keep in mind one thing: these are not short term fixes you can apply for a month or two and forget about them. This is sound financial advice for millennials, you included, to develop healthy money habits and build wealth.

Saving money is key to paying debt, buying a home, starting and supporting a family, investing, planning for retirement, and living life to its fullest. It works like a diet:

  • If you only stick to it for a while, you will eventually end up in the same bleak situation or worse.
  • If you turn it into a lifestyle, the benefits will be incommensurable.

But let’s get to it, shall we? Here is what you have to do:

1. Review Your Credit Cards’ Terms and Conditions and Start Using Them Responsibly

Random use of your credit cards can get costly. You’re probably missing out on valuable credit card perks and paying a huge interest.

It is time you found out what each credit card has to offer and use them in such a way as to enjoy the most benefits with minimum fees.

Pro Tip: To avoid browsing countless bank websites and make sure you get the best deals, compare offers for free on CreditCards.com or CreditKarma. They can also help you monitor and improve your credit score, and you know that a good credit score is a requirement for access to the best credit cards

2. Check the Reports of Your Credit and Debit Cards and Eliminate Unnecessary Expenses

You surely have some subscription you forgot to cancel. Perhaps a magazine or newspaper subscription, an app you no longer use, or a fitness program subscription from when you were hoping to tone up and lose weight.

Canceling unused subscriptions and eliminating unnecessary expenses is an important step in any millennial financial planning venture.

Pro tip: If you lack the time or dread the thought of having to follow impossible cancellation procedures, there is an app that will take care of everything for you. It will even fight bank fees and negotiate lower bills. Read more about it here!

3. Lower Your Utility Bills

For some utilities, you’ll be able to negotiate lower rates or find a more affordable plan. For others, you may have to switch providers. The best news is that if you manage your electricity usage carefully, you can even earn rewards.

I know you hate dealing with them, but you could save hundreds of dollars a month, and that means thousands of dollars every year.

Pro tip: Don’t do everything yourself! Let BillShark negotiate for you, check out our list of cheap phone plans, and help your electricity bills pay for themselves with Arcadia Power!

4. Review and Rethink Your Insurance

If you care about your future, peace of mind, and complying with the law, you probably pay for life insurance, car insurance, home or rental insurance, and more. But did you really get the best deal on those policies?

It is time to check and take measures if you didn’t. Perhaps you can find lower rates, better coverage, or both. You could bring all your policies to the same insurance company, insure other family members as well, switch to pay-per-mile car insurance, and more.

Pro tip: Looking up and comparing insurance offers can take time and energy. Make it easier by using an online comparison website like Insurify!

5. Lower Your Regular, Necessity-Based Expenses

We don’t expect you to starve, walk for miles, or give up the things you like. However, there are ways to get them at lower prices. Here are a few ideas:

Pro tip: Believe it or not, you can save big money if you follow this financial advice for millennials. To get an idea of how much and discover even more basic savings opportunities, check out our 12-month plan for living on a tight budget!

6. Spend Less on Entertainment and Wims

You deserve to have fun and enjoy yourself but you can do that without spending a fortune. You can organize movie nights or buy cheap movie tickets, go to street festivals and concerts rather than attend private events, go hiking or swimming in nearby lakes rather than paying club memberships.

Also, you should do everything in your power to avoid buying on impulse. Never go shopping on an empty stomach, avoid commercials as much as you can, unsubscribe from merchant newsletters, and deactivate shopping app notifications.

Pro tip: Music is the key ingredient to a fun, unforgettable evening with friends or your loved ones. Use these free music apps to support your savings goal and create atmosphere!

7. Shop Smartly

You may already be following some of these tips, but the savings part of our millennial financial planning guide wouldn’t be complete without them. On your every shopping session, whether online or in brick-and-mortar shops, remember to use:

Pro tip:  Always use technology on your shopping sprees. There are numerous money-saving apps that can help you ease the toll on your budget and improve your experience.

III. Millennial Financial Planning: Guide to Paying Debts

We’ve already established that debts are a major setback for millennials. Since their interest exceeds anything your savings or investments could yield, keeping them and using the money you saved for other purposes would simply be unproductive.

The only situation when this theory does not stand true is when your employer engaged to match your 401 (k) savings and you have no money to save. It pays out to get a loan and deposit the maximum amount your employer committed to matching, as your savings will double and justify paying the interest on the loan.

Here are the steps you need to follow in order to pay out your debts:

  1. Make a list of all your debts
  2. Review their terms and conditions
  3. Decide which debts have the highest interest and late penalties to pay them first
  4. Find the money you need to pay them
  5. Avoid getting into more expensive debts

Pro Tips

If you haven’t saved enough money to pay your debts, it may make sense to refinance or borrow money under better terms.

Look into debt management systems like Tally and Debt Genius. The former helps you prioritize debts and gives you a cheap credit line to pay the ones with high interest. The latter gives you early access to your paycheck, to avoid needing expensive payday loans.

To come up with the money you need faster, start using Qoins. It is an amazing app that rounds up your credit card payments and saves the change to help you pay out your debts. You can read all about it here!

IV. Millennial Financial Planning: Guide to Making More Money

As explained above, it’s not safe to rely on a full-time job alone. You need more money, more alternatives, and a safety net. What can you do?

Considering that over 60% of millennials expressed their preference to work from home and you already have a job, we’ll focus on gigs and side business ideas that require modest to no investments and are available and accessible to anyone:

  • Rent out a room in your home – We promised to teach you how to monetize your home. You can become an Airbnb host and rent it out by the day. Obviously, you can also set up a home office and use it for any of the activities below that you feel like trying.
  • Become a rideshare driver – If you own a car, you can drive for Lyft or Uber. The money is good, and it up to you when you get online and what rides you accept. You can work for one or two hours daily, at night, or on weekends.
  • Deliver food or packages – Apps already rule the gig market, especially that of deliveries. If you want to deliver packages, our guide here will help. If you prefer to deliver food, it’s best to find work through apps like Doordash.
  • Babysit – More and more families have a hard time finding someone to watch and care for their kids while they’re off to work or going out, and they’re willing to pay big money. Platforms like UrbanSitter make it easy to find new clients and allow you to choose locations, set pay levels, and more.
  • Walk dogs – Americans love their pets and don’t mind paying to make sure these get their daily exercise. By joining a platform like Rover, you can easily find a couple of dogs to walk in your free time and round up your budget.
  • Sell cosmetics – Avon and other cosmetic companies will pay you up to 50% of the sales you drive for them. Not everyone is cut for this job but those that are can pay big money with it while earning free products and huge discounts on their own purchases.
  • Flip products for profit – Many people do it, so why not you? You just buy products cheaply and sell them for more. Not all products will get you money, so check out our list here to make sure you start on the right foot!
  • Tutor others online – If there’s something you know really well and you have the gift of being able to pass on information in an easy to understand and memorize way, you can make money from online tutoring. Think video, audio, and written guides, or comprehensive packages that combine these formats.
  • Blog – It’s a great way to express yourself, relieve stress, and do something you like, and there are many ways to make money with a blog.
  • Start a dropshipping business – You simply create an online storefront with your favorite products and earn a commission from sales that you intermediate. We’ve covered the steps you need to follow here.
  • Become an affiliate marketer – You can read all about affiliate marketing here, but the easiest way to make money with it, one we’ve covered in detail, is to join the Amazon Associate Program. It’s easy and highly profitable.
  • Freelance – If you know a trade, you can monetize your skills online and earn money in your free time, at your own pace. Platforms like Fiverr or People Per Hour are a great place to find your first customers, and there are many tax deductions available to freelancers.
  • Start a local service business – You can keep doing what you already do for a living but work for yourself. You can also try your luck at something else exploit skills you’ve neglected until now. Check out our posts on starting a cleaning, roofing, or rental business for ideas and guidance!

The best thing about these money-making ideas is that most of them can easily turn into a side or even full-time business. They let you do what you like, set your own schedule, and earn according to the effort you put in.

Pro Tips

If you do not like the above ideas, you don’t have time for them, or you are not sure you can make it, don’t give up before reviewing these 100+ ways to make money. One we’ll surely appeal to you.

Our personal favorites are money-making apps that pay you for stuff you already do, like walking, playing Trivia or slots, watching videos, taking surveys, visiting stores , or losing weight.  You can find a list of money making apps we’ve tested here.

As you move on with your life and replace things around your home, don’t throw away the stuff you no longer need. Sell them on eBay, Facebook Marketplace, Craiglist, or through Decluttr!

V. Millennial Financial Planning: Guide to Investing

We’ve already explained, and you’ve probably figured out by now that you cannot save and earn enough money to retire and fulfill all your dreams.

It would probably mean living on a tight budget for the rest of your life or working like crazy, and these are not viable alternatives for someone who should be enjoying life and start a family.

How do you come up with the money you need? You make the money you’ve already earned work for you. There are numerous investment opportunities out there, so all you have to do is choose.

Before you get started, we have a few tips that could get you a long way.

Investment Advice for Millennials

  • When reviewing investment opportunities, consider not only possible gains but also risks and potential fees. Depending on your choices, you could lose money or spend a great deal of the money you’ve earned on fees.
  • Start with low amounts, to avoid strain on your budget. This way, you get a chance to learn and diminish risks. If an investment does not yield the desired returns or makes you lose money, you won’t lose much.
  • If an offer sounds too good to be true, it probably is. Always do your research and learn from the experience of others before you invest your hard-earned money.
  • Don’t invest money that you know you will need soon. In order to yield high returns, most investment opportunities will need time and cashing out your investment early could bring about fees.
  • Never invest all your money in a single opportunity. You should pursue several opportunities, with different amounts and money and over different periods. This way, you can track which ones are more profitable, control risks, and have access to some money should the need arise.

For more advice on how to approach investment, check out our rookie guide here!

Investment Opportunities for Millennials

Now that you know how to approach investments, it is time to see what your options are. Here are our recommendations:

1. Bonds

Even the government and the major corporations need to borrow once in a while. When they do, they make bonds available.

The best thing about bonds is that you can be sure you will recover your money and you know from the beginning what returns they will yield.

Just keep in mind that these are long term investments, usually for $1,000 per piece, and there are no ways to increase their returns down the road.

2. Real Estate

The real estate sector has always been worth investing in, and if you choose your projects carefully, you can make some nice money.

Of course, most opportunities in this field require high amounts and long investment periods. Withdrawing your investment early could bring about fees.

To diminish the minimum amounts and give your investments more liquidity, consider real estate investment apps like Fundrise and Roofstock. Also, see our guide on real estate investing for beginners!

3. Stocks

They yield some of the highest returns but they are also risky. You’re basically betting on the future of a company, so make sure you know that company and they have a promising future!

One way to streamline the process and diminish risks is to use stock investment apps.

Some of them have a very good reputation and have helped a lot of people put their money to work. Check out our list of the best 17 stock investment apps here!

4. Cryptocoins

If you’ve paid any attention to the digital coins’ market, you’re surely aware of the huge drop in value bitcoin experienced last year. It goes to show that cryptocoin investments are risky.

However, they can also yield fabulous returns, so it’s up to you to decide if you the risk is worth taking for you. One idea would be to earn the cryptocurrency you invest for free (no mining required, we promise).

We’ve already covered how you can make money with bitcoin and provided trading advice, so we’ll not get into further details here. An easier high yield bitcoin investment alternative is the iCenter Bitcoin Bot. You can read all about it and how it can yield returns of up to 140% in just 120 days here.

5. Security Tokens

This investment opportunity combines the safety of bonds and stocks with the high yield returns of cryptocurrencies.

It is still new but subject to thorough regulations of the Securities Exchange Commission. You can read all about it here.

Some deemed 2019 the year of security token offerings, so the opportunity is surely worth looking into. Just approach it with the same care we advised above and do your homework before blocking any money.

Pro Tips

Looking into the above investment opportunities and pursuing them on your own may seem overwhelming. Also, you may not have too much money on your hands.

To ease the burden and secure a great start, we recommend Acorns. Similar to Qoins, it too rounds up your payments but, instead of using the money to pay your debts, it invests it.

Before you know it, without any effort from your part, you’ll have a small amount of money growing and consolidating your financial situation.

Final Millennial Financial Planning Advice

Now you know how to prepare for the future, set goals, save money, pay debt, make money, and invest. But we’ve neglected two important parts of financial planning: finance management and taxes. We’ll look into them in the following lines:

Millennial Financial Planning and Management

You need to track your expenses, savings, debts, earnings, and investments. You can handle this in three ways:

  • Leave everything to a CPA
  • Use technology
  • Combine both CPA services and technology

If you don’t have a lot of money to manage and your situation is not too complicated, a personal finance app like Personal Capital may be enough.

It is easy to use, tracks all your finances, from income and spending to investment, it provides advice on how to grow and manage your finances better, and, what is best, it’s free.

Millennial Financial Planning and Taxes

As you may already know, most of the money you earn is subject to taxes. Every year, you have file and pay your taxes, claim deductions, and, hopefully, get a big tax refund.

The process can get pretty complicated, so you’ll need all the help you can get. One idea is to use tax filing software or apps, like Hurdlr or H&R Block.

Then, there is the obvious option to work with an experienced CPA. Of course, you can also combine the two options to make sure you leave no loose ends.

The bottom line is that you need to be wary about your finances and taxes, track your progress, and strive to improve your strategies continuously. In the end, you and your loved ones will be the ones enjoying the benefits.

Millennial Financial Planning Conclusions

You live in a tough world, one in which you have to find and build your own way. It’s more than the previous generations have had to do, but not impossible.

I know the financial advice for millennials given above is a little overwhelming. There are a lot of things expected from you, a lot of issues to take care of, and way too many ways to do it.

However, this is also good, because it means you get to do your research and pick the solutions that work best for you. That’s what your generation is best at, isn’t it?

So don’t despair and don’t lose hope. Instead, take a deep breath, gather your strength, and get to it. Start slow, take baby steps, and don’t let small mistakes or failures discourage you. Keep learning and trying, get up every time life throws you to the ground.

And, if you haven’t done it already, give yourself time to find love and start a family. Obstacles and failures are easier to overcome when someone holds your hand and helps you up, and success is always sweeter when you share it with a loved one.

Besides, it could serve your goals too: you and your loved ones can join efforts to consolidate your financial situation and make all your dreams come true. You can have a child and, thus, gain the greatest motivation of all.

You are young, strong, smart, and beautiful! You can do anything you set your mind to, so get at it, and don’t let anyone tell you otherwise.

Just don’t forget to share your experience with us and everyone else reading this millennial financial planning guide in a comment below!

Logan Allec, CPA

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.

Back to top  

LEAVE A COMMENT

Your email address will not be published.