Are You a Financially Fit Millennial? Ask yourself these questions

by ECCU

Are You Financially Fit?

November 28, 2018

As our culture continually emphasizes keeping our bodies physically fit, don’t forget to also track your fiscal fitness by considering these three questions.

Do you know where your money goes every month?

For this exercise, think about your cash flow – how much is coming in from your salary, side hustles or other forms of income, and how much is going out on fixed expenses. As money comes in, how do you allocate it toward tithing, expenses and various savings goals?

Many millennials balk at the thought of creating a budget, but a budget is nothing more than a wellness plan for your money.

“Ultimately, your budget is not about restricting your money; it’s about empowering it,” suggests Maryalene Laponsie, writing for MoneyTalk News. “A good budget finally puts you in control of your dollars and allows you to dictate where your money is going rather than letting your bank account get nickel and dimed by what may amount to silly, incidental purchases.”

If you need some help getting a budget started, check out this “10 Steps to Taking Control of your Finances” workbook, which you can use to evaluate your financial goals and ensure your spending habits align with your current plans and future needs.

Do you have an emergency savings fund?

If you live paycheck to paycheck, you’re not alone. Approximately three-quarters of Americans are living with little to no emergency savings.

“The millennials’ mistake is one that plagues Americans of all ages: failing to make a smart financial plan,” according to New York Life SVP Kelli Parsons. “Three out of four adults don’t have adequate financial protection in place.”

But don’t let this discourage you. When you’re ready to start your emergency fund, it’s often easier to open a separate, basic savings account–and remember to set up a way to add to the balance regularly.

Funding an emergency savings account doesn’t have to be difficult. Here are five ways to save $1,000 in 30 days.

Are you socking away 15 to 20 percent of your salary for the long term?

Although a fully funded emergency savings account will enable you to remain financially fit when life’s unexpected urgencies happen– it won’t help you prepare for the future.

“Living paycheck to paycheck is dangerous, because you don’t have any cushion against the ups and downs of life,” wrote financial adviser Jason Goldstein in Millennial Money Man. He suggests keeping money roughly equal to six months of expenses in an easily accessible place like a checking or savings account.

Some find saving is easier when they set up several types of accounts to track their progress, such as:

  • Money market savings: A premium account for higher balances that typically offers more features and better rates—especially beneficial when you’re saving for a major purchase, such as a car or house.
  • Certificates: A guaranteed, high-yield rate with daily compounded interest—part of your long-term financial plan, like a college fund. 
  • Individual retirement accounts: A Traditional or Roth IRA with tax-deferred savings. Even if you’re just entering the workforce, it’s never too early to save for retirement.

Just like any exercise program, becoming fiscally fit can take time. But getting into the habit of budgeting, saving and investing will prepare you for all of life’s adventures and allow you to align your finances with your faith.

 

 

ECCU offers convenient digital banking services to more than 10,000 members around the world—but that’s just the beginning. ECCU also provides trusted financial resources for strengthening Christ-centered families, ministries and missionaries.

Category: Common Cents