One of the services we offer our clients is the opportunity for their children to meet with us to ensure they are starting off on the right track financially. As I explained to 600 high school girls at the Young Women Lead Conference two weeks ago, their generation will have a much different experience during their work and retirement years than their parents and grandparents.
First, they are likely to change jobs much more frequently. A recent study by the Future Workplace, “Multiple Generations @ Work” found that Millennials plan to stay in their jobs for less than three years. These transitions will make it more challenging for them to save for retirement. If today’s young adults are fortunate enough to work for a company that offers a pension plan, they are unlikely to be employed long enough to become vested. If they do contribute to a 401k plan, the probability of rolling over each one into their next workplace plan or an IRA instead of taking a taxable distribution is not 100%. If the amount is seemingly small, say a few thousand dollars, it can be tempting to spend it on paying bills or a nice vacation. It’s hard to worry about the consequences this will have on your 65 year old self when you’re only thirty.
I’m always amazed by the young people I meet with that do not opt to participate in their company’s retirement plan – especially when they are forfeiting a company match. When they begin to receive their first “real” paycheck, savings is the last thing on their mind. I recently suggested to a couple that had not started contributing to their 401k, to start at 1% and increase their investment by 1% whenever they receive a raise. As we all know, it’s very easy for spending to expand with your earnings, but so can savings.
Our cashless society has made learning about the value of a dollar even more challenging. When you don’t have to physically withdraw money from the bank before spending it, all of your seemingly inconsequential purchases (a Big Mac here, a Starbucks latte there) can add up and derail you quickly. The thing I try to impress on teenagers and young adults is that the earlier they begin to form good money habits; they increase the odds of a financial future that is filled with happiness and not stress.
A great tool to get a handle on your spending so you can create a plan for paying down debt and saving is the app/website, Youneedabudget.com. A quick way to begin to track where your money is going is Mint.com. Simply loading in your credit card and bank information will not only provide you with the details of your monthly spending, but Mint will also make suggestions about where you can save money.
Our mission is to provide financial guidance to enhance the well-being of individuals and their families. Because financial education is only mandated in 4 states (and Ohio isn’t one of them), we acquire most of our financial smarts from our parents and life experiences. At The Asset Advisory Group, we are here to help however we can; from meeting with teenagers and young adults one-on-one to creating an education series designed to educate financial consumers through the years. Please let us know what we can do to help your family succeed.