According to Jean Chatzky, an American financial journalist, author, and motivational speaker, today’s 20 to 30 year olds (born between the years of 1982 and 2000) have developed some useful and practical financial skills. Ms. Chatzky suggests that these skills are transferable to workers of all ages. Ms. Chatzky has given personal financial advice on various television shows and is the financial news editor for NBC’s Today Show.
In the December 2015/January 2016 edition of AARP Magazine, Ms. Chatzky suggests that we could all pick up a few financial pointers from millennials.
- Save more money.
- Millennials stick closely to a budget and increase the amount that they contribute to their 401(k) with each pay rate increase or job promotion.
- The maximum 401(k) contribution for 2016 is $18,000.
- If you are 50 years or older in 2016, you can make the 401(k) contribution plus an IRA catch-up contribution of up to $6,000 for a total maximum contribution of $24,000.
- Don’t overuse credit cards.
- Many people get into trouble with credit. If your balance is creeping up each month or if you are using one card to pay off another, you may be overusing your credit cards.
- Many millennials pay with cash or debit accounts.
- You may be tempted to cancel your credit cards but don’t. Canceling credit cards has been shown to negatively impact credit scores.
- Use technology to reduce the costs associated with investing.
- According to InvestmentNews, financial advisors charge an average of 1.2% in fees annually to manage a $500,000 portfolio.
- Many millennials use robo-advisers to manage their portfolios.
- Robo-advisers are online wealth-management services that use algorithms, rather than people, to manage portfolios.
- Robo-advisors such as Wealthfront, Schwab Intelligent Portfolios, Vanguard Personal Advisor Services and Betterment keep costs low by investing in exchange-traded funds.
Source: December 2015/January 2016 AARP Magazine, page 22.
Now, get to it . . .
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