What if you could skip the years of working a 9-to-5, and head straight to what most people dream of in retirement — waking up late and spending your days pursuing your passions?
That’s exactly what Jim Sollisch describes in his New York Times piece “I Want to Be a Millennial When I Retire,” a reflection on how his 23-year-old son lives the good life playing music, traveling and working part-time as a substitute teacher.
He paints a nice picture, but unfortunately for most Millennials, one that’s a far cry from reality. Most people assume being young means you have fewer commitments tying you down, but this generation has been shackled to record levels of student debt and unemployment over 13%. With less opportunity, the typical 9-to-5 job with benefits and a 401k might not even be an option for many.
And even for those lucky enough to have a job, if you’re not saving and making a decent return on your investments … well, good luck retiring before your 70s.
So, that “retiring like a millennial” stuff? More like “retiring with a bunch of debt and a completely uncertain future.” Doesn’t have quite the same ring to it.
But with a little financial planning, you can put yourself on more secure footing. Whether or not you’re pursuing your passion now — if you want a chance at doing so in the future, try these straightforward steps.
If you don’t know what you want out of life, how will you get there? If you want to be an entrepreneur, figure out how much startup money you need and start researching where you can get it. If you want to sell artisanal pickles on Etsy, brush up on your canning skills and figure out how much you would need to sell to become profitable. Or, if your goals are a little less out there, figure out how much you would like to have in your emergency fund by a certain date, or when you would like to have your car paid off. Speaking of which …
Pay Off Debt as Soon as Possible
Not the most exciting advice, but important nonetheless. Try to pay off more than just the minimum — if you can outpace the interest accruing on your loan, you’ll end up paying less over the long run, freeing up additional money to invest or put toward your other goals.
Act Your Wage
In your first job out of college, it feels like you’re flush with cash. So why not buy a sports car, or rent an apartment in the city? Well, it might not feel so glamorous if you can’t afford to fill up with the premium gas your car needs, or if your deluxe apartment is bare of furniture. As the saying goes, don’t let your upkeep be your downfall — if you live well below your means, you might just find that it’s easier to weather an emergency, or save for the big-ticket items you want because the rest of your costs are low.
Know How Much You Need to Save
Whether it’s for emergency savings, a new car or your eventual retirement, you should sit down and figure out how much you need to put aside to get there. Free online budgeting tools like Mint.com are great for tracking saving goals. For retirement, you should also check annually or quarterly to see that your portfolio holdings are generating the kind of returns you need to grow your money to a particular goal amount. If they underperform and don’t look to be turning around, consider switching to a different fund or stock.
You can’t assume your job path will be linear, so invest in yourself. In my first job out of college, I flip-flopped between four different positions within the company in my first year, all of which required me to learn new skills. If you keep adding to your resume, you become more valuable to your employer, and secure your ability to keep making money even if you get laid off.
These guidelines might not be easy, but they are simple. It doesn’t take genius to become a traveling folk musician, or whatever you want out of life, just a little bit of discipline and a set plan to make sure you have the financial security you need.
As of this writing, Carla Lake did not hold a position in any of the aforementioned securities.
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