If you had access to sound financial advice in the early stages of your career, would your financial journey be different today? For many of us in our twenties, financial matters take a back seat. Since there’s so much future ahead of us, saving for it has little appeal. So, we get by and make decisions in a haphazard without any idea of what the bigger picture looks like.
Here’s why Millennials more than any other generation need a financial plan.
1. Spending Habits
Previously, the demarcation between needs and wants was very clear. In your parents’ generation an annual vacation easily fell into the bucket of wants. But today for a millennial – this might genuinely fall into the need bucket. Millennials like to live life king size and there’s no harm in that as long as it’s sustainable. A financial plan will help every millennial set clear priorities and work towards a sustainable lifestyle.
2. Debt Management
Sometimes, living life king size is fueled by debt. We all know someone who bought a car they couldn’t afford or has racked up credit card debt. Loading up on debt, could delay your ability to create wealth for a long time. Staying in the debt trap could take a toll not both your financial and mental health.
Every millennial knows how to access and utilize credit facilities. Not every millennial knows how to manage debt effectively. Having a financial plan in place structures a framework that manages debt and creates wealth.
3. Work Life Balance
Millennials are far more conscious of their work life balance and mental health than previous generations. So, they opt for unconventional career choices that afford flexibility. Millennials also like to work at start-ups. Unlike their parents, millennials may not have access to accumulated retirement benefits from a lifetime of service. This essentially means that the onus of retirement planning falls entirely on their shoulders. While retirement is far off, there’s no harm in starting right now.
Millennials seek different things. Marrying early or settling down into a house of one’s own is not a priority like before. Instead, millennials may want to go on vacation every year or save for a business idea or just spend on themselves. When requirements are so different than before is the same plan going to work?
5. Risk Capacity
Millennials are a lot more open to taking risks in their personal lives and careers. However, when it comes to managing their finances a conservative streak pops up. Millennials still predominantly invest in assets that are considered to be safe. But if you want to score big and you have time on your side, adopting a more aggressive stance could help you get there. The process of financial planning will throw light on what kind of financial risks you can afford to take.
If you identify as being different from the generation that came before you then you also know that the solutions that worked for them may not work for you. It’s time that you take control of your finances by working to a plan.