The jokes about millennials being perpetual children are aging about as quickly as millennials themselves. With the eldest of our generation pushing 40, lately we’re less about rosé all day and more about term life insurance.
The geriatric among us were already working (or trying to) when the Great Recession hit. And now, some of the eldest members of Generation Z are graduating in virtual ceremonies and taking those first wobbly baby deer steps into an uncertain pandemic-era economy. Listen, Gen Z, we know you make fun of our skinny jeans, but we also know the fear you’re masking behind those overconfident TikToks.
We get it, and we want to help. Think of millennials as your still-cool yet slightly out-of-touch older cousins. In 15 years, you’ll be us: trying to save for both a down payment and day care, wondering why your friends can afford to travel and you can’t, and feeling like you’ve missed the boat on opening a retirement account. Time flies, so listen up.
Don’t wait to get started — or to get help
Laying a good financial foundation isn’t one of those tasks you can put off until later. It’s easier to start when you’re younger, even if you don’t have much money yet because your life is likely less complicated.
Watch: The miracle of compounding – How to Invest: Ep. 3
Besides, if you approach money with a “meh” attitude in your 20s, you won’t have the savings later to do the things you need or want to do.
“The sooner you get your financials— together, the less you’ll have to compromise,” says Priya Malani, founder and CEO of Stash Wealth, a financial advisory firm based in Charlotte, North Carolina.
If you feel overwhelmed, don’t wait to get help. Thanks to our recent embrace of virtual meetings, it’s never been easier to connect with a financial adviser without having to take a day off to go to their office. A word of caution, though: Bad money advice is everywhere, and it’s easy for influencers to seem like experts when they’re actually just brand ambassadors.
Nerdy tip: Financial advisors are available at a variety of price points. At NerdWallet, we recommend you work with licensed, registered, fee-only fiduciaries. That means they don’t make money through commissions for selling financial products.
Responsibly embrace credit cards
Building your credit history opens up a lot of possibilities, and credit cards are often a way to get started thanks to their relatively easy application processes.
“I think credit cards are misunderstood, and most people think of them as evil,” Malani says. “People don’t really realize how effective a tool they can be.”
With good or excellent credit scores, you have better odds of qualifying for more rewarding travel or cash-back credit cards, or loans with lower interest rates, which can save you a lot of money on a future car or home purchase. But to attain good credit (corresponding to a FICO
score of 690 or higher), you need to understand how credit cards work, so you can pick a card that’s well-matched to your current situation and use the card carefully.
Brooks Dozier, a 35-year-old living in Overland Park, Kansas, was around 18 or 19 years old when he received a credit card offer in the mail. He accepted the offer, got the card and promptly maxed out his credit limit.
“I didn’t think about the consequences,” he says. But reality hit when the first credit card bill arrived. The account went into collections, and it took years for him to pay it off. Plus, the derogatory marks remained on his credit report for seven years.
Dozier’s advice to the next generation: “Please, read the fine print. Don’t just accept a credit card because they offer it to you because it can really put you behind.”
Read: See how this 24-year-old paid off $20k in credit card debt in less than a year
Malani recommends thinking of your credit card like a debit card that deducts money from your checking account once a month.
“You’re using someone else’s money,” she says. “Using it to enhance your lifestyle is the wrong way to think about it, and that’s where people get into trouble.”
Save for retirement and the short-term, too
A lot of financial advice can make you feel like a terrible person if you don’t make saving for retirement your top priority. Yes, saving for retirement is important, but with probably 40-ish years to go until you retire, you also need to save for short- and medium-term goals along the way.
You don’t want to have to wait until you’re in your late 60s to enjoy yourself. And I’m not just talking about big stuff like buying a house. It’s also hiring professional house cleaners, signing up your kid for the soccer team and getting adult braces — all the not-so-cheap things that you might want for yourself sometime in the near future. (Trust me when I say that the house cleaning is worth it.)
“At a national level, we’re sending very strong messages to this age group to start saving for retirement,” says Katherine Liola, founder and CEO of Concentric Private Wealth in McLean, Virginia. “You need to make sure that you’re also focusing on all the life that will happen before retirement.”
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Sara Rathner writes for NerdWallet. Email: firstname.lastname@example.org. Twitter: @sarakrathner.