As Millennials, many have lost faith in the job market and economy all together. Surely, that is justifiable considering the generation grew up in the financial crisis. Whether you have an interest in business or not, your financial decisions now will directly impact your future. It is never too early to grasp these basic principles.
1. Information
In data-driven economy the information is endless. It relives stock trends that influence both business and investors decisions. Everyday, millions are spent on the information sourced via trading terminals.In order to obtain, the real-time updates on market data. More importantly it determines consumers' spending habitats. How much should we save or invest? Sponge up all the information, collecting more relevant information at the right time is key to determine your next financial transaction.
2. Risk
A fundamental concept in finance, because it relieves the uncertainty in the market. The future is undetermined. No human, not even, Theresa Caputo from TLC, can predict the outcomes of your finances. Therefore, it is necessary to always ask these two major questions in regards to risk:
Question 1: What is cash flow?
Answer: It affects liquidity (money that can be easily convert into cash).
Question 2: What is the return?
Answer: R.O.I. (Return on Investment) With high risk yields a higher reward, but if you are willing to take such a risk, ensure that it is a well calculated one!
3. Bonds
During economic periods of serious economic decline, the safest place is in United States government bonds. They are risk free, the U.S is the only country in world yet to bankrupt. So, investors are guaranteed payments. Otherwise. For us, millennials, youth is still an advantage, stick to the investing in the stock market!
4. Mutual Funds are key.
Never buy or sell individual securities.Single stocks are a gamble and in this gambling match assume the person on the other side of the table knows more than you.Instead buy inexpensive, well diversified mutual funds, because news happens daily, typically unexpected. If there is a bull market there be no consideration whether or not to sell , because you spread out the risk.
Either way, watch for actively-managed funds by a person, you will be subjected to 4-5% charge- which could be used to save or invest! If a managed fund is absolutely necessary, make financial advisors commit to fiduciary standards.
5. Maximize Savings.
Save at least 20%. Say your paycheck is $1,000, after bills are paid, put away $200. In fact, the more the better. While initially it will be difficult, you will be thankful in the long-run. Start by at a store of getting into the habit of asking yourself, do you I really need that new pair of shoes or a new purse, or do I just want it? While, build a saving, don't just save to save, save some to invest in those mutual funds.
6. Roth IRA are friendly!
Maximize tax-advantaged retirement vehicles. Just be cautious on specific terms. A traditional IRA seems appealing since you escape paying taxes up front. Don’t let that tempt you. Most college students now will be able to retire around 2055, so in 40 years from now interest rates will much higher. When you withdrawal money from the account and have to pay the taxes. Whereas, a Roth IRA, you have money in retirement (which is critical since you are no longer working), although tax payments are demanded in the beginning. Not to mention Roth IRA money can be left in the account for as long you desire!
7. Credit Cards = Harsh Responsibility
College Students already are debt from loans, so acquiring a credit card is dangerous. Every month a payment needs to make in full and on time, or else it will significantly impact your credit score. Bet yet, use the card for small transaction around $10 or opt for a debit card, it is more controllable. With any payment method, keep all receipts and create an expense report in excel.
8. Buy Term
Pretty soon, an insurance agent will approach you asking: Would you like to purchase life insurance? Answer: No. If you need to purchase life insurance, always buy term. If you have no obligations such as a family to look after, there is no need for it.
9. Negotiate Price…
Constantly. Release that inner salesperson, something is only worth what you’re willing to pay for it. So allow every opportunity to ask about discounts. The worst answer you will receive is no. Don't let that discourage you because , there is always the most glorious gifts companies offer, COUPONS. While, it take a bit more work verse just ask for a discount, it ultimately achieves the goals of receiving an item for less. You can take as far as having a binder full of them or soaking up the discounts your student id offers.
10. Be early. Work Hard!
Demonstrate leadership. For internships, work, or important events if your 5 minutes early consider yourself late. Show your dedicated by being there 10 minutes ahead of schedule. Coupled that along with diligence will determine your succeed rate. The bare minimum is unacceptable. If you set certain career or monetary goals, be prepare to continuously work. Even on bad days or when there something else interesting is happening.
Okay, so you’ll miss out few on some social events, there are always other ones. Don’t let that cloud your aspirations. Get your life in financial order and let passion, perseverance and patience fuel success.
