12 Financial Questions Millennials Ask

1. What percentage of my monthly income should I be saving at this age to start planning for  my future?

10% of your gross income is a great goal to strive for when it comes saving for retirement. If you can’t afford to put away 10% of your income now, start with a lower % and plan to increase that by 1% each year till you reach 10%.

 

2. How much money do I need in order to start investing?

When it comes to investing for retirement, in a qualified account, many investment companies will allow you to set up an automatic investment plan for as little as $50 a month.

 

3. Do I need to start thinking about life insurance now? What is life insurance/what are the benefits?

Life insurance is just like many other types of insurance. You pay a premium for a benefit or insurance in case something happens. In this case you are insuring your life. If the insured passes away, a beneficiary, named by the policy owner receives a lump sum of money (the death benefit). The younger you are and healthier you are the less the premiums cost. The purpose of the death benefit is to replace the income of the person being insured. Typically individuals will purchase life insurance when they get married, buy a house or have children.

 

4. What are some daily tips I can start doing now to ensure a more financially secure future? 

Spend less and save more. Start saving as early as possible—the sooner you start the more likely you are to reach your financial goals, even if the amount is small.

Cut back on daily non-necessities—eat out less (including paying for drinks at restaurants), make coffee instead of buying it, don’t pay for items or events that are upcharged, see a matinee instead of going at night. Cutting back on daily spending adds up quickly.

 

5. What’s the best/fastest way to build my credit? Tips to maintain it?

The best way to build credit is to use credit and pay it off in a timely manner. The larger the credit amount you have access to the better, as long as you are not maxing out your credit limit. Keep your credit card accounts open, even if you are not using them, unless you are paying an annual fee to just hold the card.

When you get a credit card, treat it like a debit card—spend only what you have in your account, and PAY IT ON TIME.

 

6. If I were to invest, what market(s) should I be considering?

Start with basic index investing. Picking a broad market index that is low cost and incorporates many industries in the business world is a great starting point.

 

7. Do I need a financial advisor? How much would I be paying for that kind of financial advice?

You should consult an advisor if you don’t have the time to research your investment options yourself. A good financial advisor can help you with budgeting, saving and spending.

Typically, you’ll be paying 1% of total assets being managed.

*See blog post Financial Concerns of Millennials Today—Why Do I Need a Financial Advisor?*

 

8. Most of my income is going toward rent/necessities—is there a better way to balance and increase my disposable income?

Most people when they start off, feel like they can’t afford to invest. The best strategy is to treat your savings or retirement account like a bill. Pay yourself just like you pay your rent, utilities etc. When you pay yourself first, you will realize that you can cut spending in other less important categories like entertainment.

 

9. Can I start a retirement fund without at 401k?

Yes. A 401k is a retirement plan that has to be offered by an employer. If your employer doesn’t offer a retirement account like a 401k, then you can contribute to an IRA (individual retirement account). If you are self-employed, you have other retirement account choices that have higher contribution limits, similar to a 401k.

 

10. How can I learn the basics of investing?

Depends on your preferred way to learn. You can read books; thousands of books have been written about investing. You can browse the internet; thousands of sites talk about the basics of investing or you can meet with a financial advisor that takes the time to educate you on the basics of investing.

 

11. How do I manage my college debt?

Just like any other bill, pay it in a timely manner and make sure you understand the terms of your debt. Know the interest rate you are being charged and whether the interest rate is fixed or variable.

 

12. How do I start budgeting my life?

Use common sense. Don’t spend more than you make and include savings as part of your budget.

Sit down and go through your last month’s purchases, categorizing them by Rent/Payments, Food/Necessities, and Unnecessary Purchases. Be honest with what you consider food/necessities (restaurant food is NOT a necessity!)

Then ask yourself: How much are you spending on unnecessary purchases? What can you cut back on? Can you afford to budget better for the future?