We’ve all been there: scrolling through our phones to see the perfect beach picture just posted by our friend on our social media, immediately inciting FOMO (Fear Of Missing Out). It’s easy to get caught up in the perfection that can be misjudged here; you don’t see the money that was saved up over time, you don’t see all the planning that went in to making the ideal vacation or weighing of the options on taking the trip over putting that money towards something else. We see what’s been placed in front of us, a carefully filtered image selected from 25 takes, that perfectly captures the ocean waves with the picture-perfect lighting to incite that twinge of wanting what we don’t have.
I am a Millennial, an elder Millennial; therefore, I have an obligation to make sure to pass on the information you need to prevent suffering from further FOMO. The good news is whether you’ve started planning or not, we have one major advantage over older investors: time. Let’s take a few steps back so we can focus on how to make better decisions with money today that will help us meet our personal financial goals and stop chasing after someone else’s.
First off, take a few minutes to think about what’s important to you; you won’t find this in your Instagram feed. To help you get started I’ve outlined the top 5 goals for Millennials today and what you need to know for each.
1) Retirement – Pay your future self.
The easiest way to do this is to save to your 401(k). At least, save enough to get the full employer match if it is offered, and if you’re not sure what that is, check with your company’s HR today! Every year when your performance raise comes around give your future self a raise, too, by increasing the percentage you’re contributing each year. If you’re already doing this, here are a few other ways to save for retirement.
2) Debt – Pay off your commitments.
This doesn’t happen overnight, and it takes some planning to make sure your debt doesn’t hurt your future self and goals. Get started planning today to reduce your debit balance.
3) Home – Know what you can afford.
When calculating what you can afford for a new home, be sure to use PITI (Principal, Interest, Taxes and Insurance) as the monthly expense—not just principal and interest payments. Real estate taxes and home owner’s insurance are often escrowed into the monthly payment with your principal and interest payments for your mortgage. PITI should remain lower than 28 percent of your gross income. (Gross income is your top line salary before taxes, insurance and retirement savings.) Want help calculating what you can afford when purchase a home? Check out this calculator.
4) Travel – Start a vacation fund.
Figure out how much you want to put towards taking trips every year. Then start contributing every month to this fund. This way when you take your trips, they are already paid for, and you know exactly how much you can spend. You’ll be able to fully enjoy yourself and not have to worry about a thing when you get back to real life.
5) Education – Jumpstart your children’s future success.
You have hopes and dreams for your children, and though they might be too young to understand, you can help get them started off on the right foot.
Just like posting the perfect image, preparing for your financial future requires a lot of planning and reviewing options. You can’t just wing it and expect everything to work it out. Your goals will change as you do, so it’s important to revisit your goals and priorities from time to time.
The good news is there are financial professionals that can help you get started. If you are a do-it yourselfer, you can start planning for any or all the above goals by getting started today at BrightPlan. If you’re ready to work with a Financial Advisor, check out how Plancorp can help you reach your future financial goals.
Either way, let’s change FOMO as we know it today, to Financially Owning My Objectives and set our future millennials selves up for success!