What is your current age? Is it between 22 to 37 years? You are a millennial for sure. Yes, friend, I am a millennial too. Do you know an interesting fact about us? We are currently the biggest generation in the world. Unfortunately, we had faced a demon called the Great Recession in the early phase of our career. That is why we have coined a term called FIRE. Let's check out how we can make our 'Financial Independence, Retire Early' movement successful.
How the millennials see the world:
Millennials look at the world differently from the previous generations. Working parents have brought them up. Their parents worked hard to earn a living. Still, they have faced difficulties with saving for retirement. That is why a millennial thinks differently from past generations about post-retirement savings and investment.
What are the financial troubles they are facing currently:
All was not good for Americans at the beginning of the 21st century. We had encountered two significant mishaps in the form of a terror attack and the great recession. The millennials were at the beginning of their careers at the time, so they had to absorb the most shock. Investopedia report says, 15% of them were then in their early twenties. The young workers were fired without any fault. It was a hands-on experience for them. They have realized why saving is the most crucial matter for them.
How much debt millennials currently have:
Economic policymakers thought a low level of spending results in limited economic growth. So, they have made several plans to boost spending. They have forgiven a significant part of student loans. New York Federal Reserve Consumer Credit Panel says millennials had student loans up to $1 Trillion in 2018.
How to get financial independence quickly:
When you are young, you may have to live paycheck to paycheck life in the initial stages of your career. Your experience will count more than your earning figure. But you're getting a chance to learn the nitty-gritty of finance like savings in that initial period.
Read the five topics carefully to know more about financial independence
1. Get rid of debt and focus on financial independence:
A millennial's focus must be on getting rid of the student debt and other loans. The financial condition is not so favorable now with the high unemployment rate and low pay package. You can tackle the problem with the debt consolidation program. If you are thinking, what are the benefits of debt consolidation? Well, you can consolidate your multiple debts at a reduced interest rate. Debt consolidation program can help you in savings too. A reduced interest rate means you are saving a definite money on the interest rate of your outstanding balance. Just pay a single monthly payment to the debt consolidation company. Keep the extra money on a savings account. This can be your first step towards savings.
2. Start thinking about 401(K) account:
You may or may not agree with my opinion. Millennials are the most unfortunate generation in the last 50 years of US history. They have agreed to accept a low pay package helplessly due to the Great Recession. They can escape from this situation only through savings for the future. They can save money in a 401(K) account from an early age to get a lump sum after retirement.
3. Opt for stock market investing:
The proverb says, one bad thing will help you to learn four good things. Millennials have experienced it better than others. Indeed they were unfortunate to start their career at the wrong time. But they are fortunate as the first internet-savvy generation. The Internet can help them to learn how to invest in the US stock market. They are the first generation stock-market investors who can invest on their own. They don't have any need for brokers. The Internet is enough for them to get tips about the stock market. They can make payments to their stocks online and earn money in the same way. It is a win-win situation for them. Earn profit from your investment as well as you don't have to pay a single penny as a brokerage.
4. Why millennial need to save more than previous generations:
WDTN.COM has quoted an expert retirement planner about how the current retirement planning is going in America. Matt Carey, the retirement planner, says that the average American had spent about $40,000 in a year after retirement in 2017. Social security was the provider of half of the spending.
So, millennials have to save about one time of their income by the age of thirty. When they retire at the age of 60 or 61, the savings must be up to ten times the income.
Don't worry. Millennials have a clear idea about savings. They are smarter than Generation X. The Schwab study says, about 81% of millennials have a clear idea about how to achieve their financial goals. Generation X is ranked second to them about doing financial planning.
Only 65% of them had a good knowledge of creating a sound financial plan.
5. What the millennial can learn from previous generations:
Millennials can learn from previous generations useful money saving techniques.
If you are in the mid-thirties, saving must be your topmost priority. You can get several saving techniques in the market. These techniques are the best way to reach financial independence. Read the five sub-points which are written above. These are the best ways to learn how to achieve financial independence.