My Child Is Finally Working! What’s Next?
- The No. 1 concern of parents and grandparents today is educating their children and grandchildren about money.
- Millennials have a very different view of life and money than older generations do. They change jobs frequently and don’t expect corporations or the government to help them with retirement. They know they have to be financially self-reliant.
- Because of large outstanding student loans, even young people with good salaries must still live at home for a while.
***Get this free U.S. government report, 15 Economic Facts About Millennials
Going into my senior year at West Point, I bought a life insurance contract and started putting money away on a monthly basis. The account grew over time, and it sure came in handy 10 years later when I had some personal family needs. More important, the insurance contract got me into the “saving first” habit. And if there’s one common denominator among all our clients, it’s having a “save first and spend second” mentality. That’s why so many are successful and financially independent by retirement age.
By far, the No. 1 concern of parents and grandparents is educating their children and grandchildren about money. Millennials—those born between 1980 and the early 2000s—don’t believe there’s going to be any retirement for them, whether through a corporate plan or government Social Security. That’s significant, because they make up one-third of our population—they’re an even bigger cohort than Boomers. Millennials already know they have to make it on their own, so they’re very interested in how to do that.
Save first, spend second
When we sit down with millennials, the first thing we advise then to do is put at least 15 percent of their income away for retirement. That can be a tough pill to swallow since they want to get out of their parents’ house and find an apartment. But many still have huge student loans to pay off. So, it’s really still about saving first and then addressing their spending plan second, even if they have to live with their parents until they have enough salary built up on an ongoing, monthly basis to get out on their own.
The second piece of advice is setting up their spending structure—paying their loans down, paying rent and paying all the other things that come with it. A spending plan has two major areas: short-term needs and long-term needs. Millennials are not as loyal to corporations and other traditional institutions as older generations are. They’re going to move around a lot, so we have to help them establish a savings pattern through 401(k)s or direct accounts at a bank. They need to establish an automatic monthly savings habit, like my insurance account forced me to do in my 20s.
If you need help in this area, please contact us. We can help work with your millennials to get them firmly established. They tend to listen to us a little more than they do to their parents and grandparents. It’s just the way it is.
Until next time, enjoy.
Don’t forget to download the free U.S. government report 15 Economic Facts About Millennials
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