This was originally published on Monday, October 24 ,2016 in the Pacific Daily News. Click here to subscribe to the PDN.
When you think of millennials, you might conjure up free spirits who like adventure, take risks and seek thrills. Pictures of 20- and 30-somethings cliff diving, hiking and traveling to exotic places are common.
But when it comes to finances, millennials are quite conservative. Millennials came of age when the Great Recession was in full swing. Many saw their parents lose jobs or lose big when the stock market and real estate markets took a plunge. Millennials watched as their parents struggled to keep their homes or moved to downsize.
Growing up during the Great Recession has made millennials uncomfortable when it comes to investing their money. This generation has an opportunity to form good money habits that will last into retirement. Here are some tips to follow:
- The future. Many millennials grew up to think very short term when it comes to their money. Think about what you want to do in the future. Get another degree? Do you want to retire early and maybe even seek a second career? By planning today you can set some goals that will make your future dreams come true.
- Retirement. Your retirement is still some time away. You have the opportunity to diversify your portfolio and be as aggressive or conservative as you want, depending on your goals. Decide when you want to retire. Use that date to determine your course.
- Debt. Know the difference between good debt and bad debt. Good debt increases your value, like a mortgage or student loans. Bad debt is something that you cannot cash in, like credit cards or vacation loans. Pay off your loans with the higher interest rates first and then move on to the next highest and so forth. If you use the money that you would have used to pay off the debt, and add it to what you currently are paying on the second debt, you will be amazed at just how fast they will get paid off.
- Technology. Millennials do not know a world without the internet. They grew up digital and are not intimidated by technology. So why not use it to manage money? There are some awesome apps that can make managing your money fun and easy. Some apps will even send a text to your phone to let you know that you are coming too close to going over your budget.
- Don’t forget yourself. You don’t have to work hard and not enjoy your money. Always set aside some money for you to enjoy. It is OK to treat yourself, just as long as it is in moderation. But stay firm to your spending plan. It’s easy to get sidetracked and think you can make it up later. If there is something you want that is outside of your spending limits, take the time and save for it.
- Credit score. Start by getting copies of your credit reports from the three free credit bureaus. Your credit score determines what lenders are willing to charge you for borrowing their money. It is also used to determine how reliable you are. Employers, landlords and utility companies will often take a look to see your spending patterns and how responsible you are with your money.
Michael Camacho is president and chief executive officer of Personal Finance Center. He has more than 20 years of experience in retail banking and at financial institutions in Guam and Hawaii. If there is a topic you’d like him to cover, email him at firstname.lastname@example.org and read past columns at the Money Matters blog at http://www.moneymattersguam.wordpress.com.