Make the Most of Your Earnings Today and Tomorrow
If you’re a young professional, it’s important to develop a strategy that allows you to maximize your earnings and plan for a financially secure future. You’re at a particularly interesting stage in your financial journey—making a good income, but likely not yet building the kind of wealth you’ll want to have to achieve all your personal and retirement goals. There are also many factors, like higher costs of living and high tax rates, which make it even more critical to create an intentional plan now. Check out the Millennial financial tips below.
1. Invest, Then Invest Some More
Investing isn’t something you should put off until tomorrow. When you’re relatively young and have many working years left, it may seem like you have all the time in the world. However, getting serious about developing your investment portfolio is one of the Millennial financial tips you should put into practice as soon as possible. The investments you make today can make a significant difference in your future financial well-being.
If your investment strategy is nascent or non-existent, start by taking full advantage of your workplace 401(k) account. If your 401(k) offers an employer match of your contributions and you don’t contribute enough to maximize this benefit, you’re essentially leaving free money on the table – maybe even more than you may immediately realize. It’s also smart to open your own IRA (Individual Retirement Account), which can add another layer to your foundation as your career progresses. Consider speaking with a financial professional to ensure you’re building an investment portfolio that matches your time horizon and risk tolerance.
2. Minimize Your Taxable Income
Being smart about your tax strategy is one of the most consequential Millennial financial tips. There are many ways to reduce your taxable income so you can set aside all the money possible to build your wealth and reach your goals.
Putting as much as possible into your IRA and 401(k) accounts is your best first step as you work to lower your taxable bottom line. Opening a Health Savings Account (HSA) can also help you lower your taxable income while also allowing you to save more for your future needs. HSAs are the only savings vehicle that offer a triple-tax advantage. That is, your contributions lower your taxable income, your investment growth is tax-free, and withdrawals made for qualified medical expenses are tax-free as well. In order to qualify for an HSA, you need to have a high deductible health plan (HDHP), so check with your insurance provider to see if you qualify.
3. Plan for Retirement Today
It can be difficult to imagine retirement when you likely have several decades left in your working life, but it’s never too early to start planning. Taking the right approach now can ensure you are prepared to enjoy your retirement to the fullest.
The Millennial financial tips already mentioned can help you develop a firm financial foundation and develop a strategy to follow to achieve your future goals. Whatever your vision, values, and dreams are for your future, there’s a path you can take to realize them as you continue with your successful career. So, take a moment to envision your dream retirement. Where will you live? What lifestyle do you want? Once you can picture how you’d like it to play out, work with a professional to plot the course for a savings and investment strategy that can support it.
4. Work Hard and Smart
When your career is going well and you’re enjoying substantial paychecks, it’s easy for lifestyle creep to slowly eat away at your earnings. In other words, you may be tempted to spend like there’s no tomorrow, but tomorrow is coming and the decisions you make now heavily impact what that future looks like. Remind yourself to keep working as hard as you can to boost your success, while also taking the necessary steps to secure your future. From the basics—like having an emergency fund and a basic budget—to more savvy strategies like lowering your taxable income and plotting a successful investment strategy, there are many ways to make your money work for you.
Millennial Financial Tips: Final Thoughts
If your hard work and dedication have you earning a high salary now, you’re well-positioned to secure financial well-being for yourself and your family for years to come. Just remember that you don’t have to tackle your financial strategy alone. At Arbor Capital, our dedicated team of advisors can help you make smart decisions with the resources you have now so that so you can continue focusing on your career with the knowledge that you’re securing your financial future, too. Contact us today to schedule an initial conversation and to learn more about our services. We look forward to hearing from you!