5 Things Millennials Need to Know About Finances

According to surveys, only 24 percent of millennials demonstrate basic financial knowledge. There are many reasons for that lack of knowledge: Some of that information comes with life experience, and some of it is facts that would have traditionally been taught in a home economics or another such class.

Regardless, it’s never too late to learn. Here are five important things millennials need to take to heart about finances to better secure a happy, safe financial future for themselves and their families.

1) You Have the Power to Negotiate Your Salary

Research implies that fewer than 40 percent of millennials negotiate for a higher salary at their first job. But 80 percent of people who negotiate for more money see at least a slight increase in their salary, so that’s a huge opportunity lost.

Don’t forget that you always have the power to negotiate your salary, especially if you’ve already been hired. Remember that the worst they can tell you is that your salary is set.

2) Have Some Money Stowed Away

Many millennials don’t have enough money saved up for an emergency. But you never know when you’ll have to deal with a major financial hit, such as a vet visit for a sick pet, a car breakdown … or a lost job.

Financial experts recommend having at least three (preferably six) months of expenses tucked away in a savings account. Otherwise, an unpleasant surprise may put you in major debt.

3) Know Your Credit Score … and How to Improve It

Everyone is entitled to three credit scores each year, but many millennials don’t take advantage of this. And since your credit score determines everything from who will lease to you to the rates you get on loans, that number is massively important.

Maybe more important than knowing your credit score is knowing how to make it better. Obviously, if you pay your bills on time and don’t have any outstanding balances with collection agencies, you’ll see that reflected in your credit score.

But there are other important factors at play. For instance, no credit history — meaning insufficient accounts in your name — is often worse than bad credit, because you’re an unknown quantity in the eyes of lenders. If you have a lot of debt through credit cards and other lending agencies, then your credit score will take a hit, even if you’re prompt about making payments. And if you have many credit cards or loans, that’s more positive for your credit score than having the same amount on one, because it shows you can juggle multiple accounts. (Just don’t take out all those cards at once.)

4) Start Thinking About Your Retirement

For most millennials, that may feel like jumping the gun. But it’s never too early to start saving up for your retirement. If you maximize your contributions to your 401(k) or other retirement fund, you’ll save a lot of money over time. Most experts recommend saving anywhere between 10 to 15 percent of your income each year into a retirement fund.

Many retirement funds have fees that go with them, especially if you’re moving around money frequently. Always try to arrange things so that you’re minimizing any such fees. And make sure to diversify your holdings, so if one part of your portfolio takes a hit you’re still on solid ground overall.

5) Learn About Tax Deductions

Tax deductions aren’t just for the rich. Keep careful track of things like student loan interest paid back, charitable contributions and business expenses. By reporting these on your taxes, you’ll save a surprising amount of money.
Many millennials don’t know much about money. But by educating yourself, you’ll be able to take the first steps to greater financial health and independence, and you’ll be able to build a financially sustainable future for yourself.

Our exceptional team members have set us apart from other CPA firms over the years. At BWTP P.C., we pride ourselves on being cutting edge of technology and industry practices, while adhering to the fundamental values of honesty, integrity, and professionalism.

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