Marby Murillo

TIPS TO ACHIEVE FINANCIAL FREEDOM AS A MILLENNIAL We all have our own idea of freedom. But we can all agree that attaining financial freedom is something that we all long for. In this day and age, where mounting debts are undeniably real, how does a millennial start to slowly break free from its shackles? It has been said that a good plan today, is better than a perfect plan tomorrow. This is particularly true when it comes to saving and investing. The sooner you get started the better. Millennials have been unfairly stereotyped as slackers, mindless spenders and a bunch of people who do not give a damn about the health of their future financial state. These views about them have been promoted by financial media and elsewhere. Should they be worried? As young adults, how do they navigate this ever-changing lifestyle and still be on top of their finances? Here are some simple and robust strategies for getting and staying ahead: 1. Track your spending. -Always be wary of where your money goes. Create a budget and to make significant improvements in your financial situation, it would be best if you live below your means. This requires sacrifice and a great amount of understanding on what you should spend for. -Spend less than you make. If you think saving for a retirement plan like a 401 (K) works, (take advantage of matching funds!!) it works because it is automatic, even a simple basic savings account that which is link to a checking account where you just automatically transfer money every time you get paid, can be ultimately effective. -Remember, “ if you cannot afford to pay it in cash, you cannot afford it.” - One good budget tracker app is Good Budget. https://goodbudget.com/ 2. Set goals. -Whether you like to have a house, a car or go to a dream destination with your significant others, it is imperative that you set up a savings account in order to make these goals into a reality. -Once you have set your goals, pick a timeline. This will give you additional motivation to meet your goals in saving. Timelines can be simple. It can be a year from now, months from now, or even weeks from now. Just be specific with it so you can stash away money quick! - In setting goals, always be aware that it should be a SMART one. SPECIFIC, MEASURABLE, ACHIEVABLE, REALISTIC and TIME-BOUND. 3. Keep your emotions in check. -If you are not careful and you will let your emotions cloud your judgment every time you feel like going on a spending spree, it will in the long run put a hole in your pocket and you will have to face the repercussions of your actions sooner or later. People who are under stressful situations normally will not think straight.” HealthGuidance.Org says, ”When you make a purchase as an impulse shopper this will result in a rush of dopamine that will be the same kind of hormonal rush that you get from eating a pudding that you really like, from falling in love, or from having sex. Over time your brain becomes used to the release of dopamine and you then need to get bigger and more regular 'hits' in order to achieve the same high. This also means that we are most likely to make purchases when we are feeling low (because dopamine is a happiness hormone) making these emotional and not logical decisions.” It is important to “tame the beast” so to speak, in order for you to clear your mind. Look at the bigger picture on what you really want and forego that “stress spending”. -According to Micah Solomon of Forbes, “There are about 80 million millennials (born-) in the U.S. alone; to put it another way, they make up some 25% of the U.S. population–and thanks to immigration, they’re a generation that is actually increasing in size. And they’re a highly influential population that influences the buying decisions of other demographic cohorts.” - If you want to spend to buy expensive things that you don’t need, save for it and pay it in cash. Abolish the feeling of entitlement and learn how to determine your “wants” from your “needs”. There is a thin line between the two so you have to think rationally before you allow yourself to spend an exorbitant amount of money for something that can be fleeting. Once you have established the two, then it’s easy for you to save up for the “want” from the “need”. 4. Learn how to invest. -Do not overdo it and learn how to diversify by having different pools of money so you can also be prepared for the future. -Consult a financial advisor to determine what investment vehicle is right for you and is aligned with the level of your risk appetite when investing. - Let money work for you! Compounding interest is the key to building wealth. Investing in the stock market is a great way to save up on those big things in life. There are two main ways for you to invest: Active Investing and Passive Investing. -With Passive Investing your money is used to buy shares with a group of companies. This group of companies is called an index. If these companies, collectively do well, so will the index and your money will grow. Passive Investing only matches the performance of an index so your investment does not outperform that index. - Active Investing on the other hand, means you have a dedicated portfolio manager handling your investment. Active Managers want to outperform the index. They use your money to buy shares to companies that they predict will do well and avoid companies that they think will fail. Your manager will try to seek out good investment to really make your money grow. The bad news is, this does not always happen. In active investing, there is room for error. So you have to choose someone who really knows what he is doing to avoid financial losses. So what’s best for you? If you find the idea of finding an active manager daunting, passive investing may be the way to go. But if you prefer to risk more, to potentially gain more, an active manager maybe more your style. A good idea might be to combine both active and passive funds. Striking a balance between the two, mean you may just get the best of both worlds. 5. Have an emergency fund. - Focus on allocating at least 6 months worth of your salary for rainy days or even $1000.00. -Car breaking down, loss of job, damage to property, you need to have a stack of money stashed away for these kinds of things. This will give you the security blanket that whatever happens, you have this amount of money to spend without tapping your other savings account. -Where should you put it you may ask? It depends on your risk appetite as well as your preference. A short term bond fund is a good place to stash away your cash. They are conservative investments that can minimize the chances of you losing your money and you can withdraw it anytime. 6. Maintain a good credit score. -Aim for 720+. That is where you are going to get the best interest rates should you plan to purchase a house, a car or even a cash loan. - A good resource to check your credit score is Credit Karma. It offers you insight and shows youproduct recommendations based on your credit profile. Don’t forget to periodically check your credit report for accuracy. 7. Earn a comfortable living. -One that will enable you to make your rent payments, mortgage payments, put gas in the car, food on the table and take your family on a vacation every once in a while. - If you know your true purpose in life, money becomes a motivation in the right way. 8. Pay yourself first. One excuse for not saving and investing that millennials use is that they want to pay up their student’s loan before they actually save money. Carrying a revolving balance on your credit card is a bad habit. You will spend more in credit as opposed to debit. In order for you not to spend recklessly, try to remove your credit card in your wallet, leave it at home or put it inside a safety box and do not use it unless something urgent arises and you are left with no choice but use it. It is helpful to think about what you value as a person and then take a look at where you are spending money. If you make that adjustment, you will be able to cut down your spending. Once you have got your spending and debt under control, it is time to save and invest. Now that you have these tips, go and be your own hero when it comes to your finances! Always bear in mind not to dream of success but always work for it!  http://www.healthguidance.org/entry/15856/1/Psychology-of-Impulse-Shopping.html http://www.forbes.com/sites/micahsolomon/2015/11/14/2016-is-the-year-of-the-millennial-customer-heres-how-to-be-ready/#10a49cd46e72