It’s easy to postpone important tasks and say you will do them another day. We all do it, from doing laundry until there is no more clean underwear in sight, to shopping when the fridge is empty and you’ve ordered takeaway for three nights in a row. However, one thing that shouldn’t be postponed until a future date – no matter how much we want it – is financial planning.

Because if we delay the organization of our finances, we delay many other things as well. A 2019 survey by Insider and Morning Consult showed that millennials are more likely to postpone buying a home, changing jobs, performing medical procedures, and even getting in touch with money – all for cash reasons.

But it’s really no surprise that millennials struggle with managing their finances. Aside from all of the external factors that essentially prepared them for failure (think the Great Recession and the COVID-19 pandemic), only 16% of Millennials can qualify as apply financially educated.

Also, an unsurprising majority of this age group feel stressed out thinking and talking about finances. Trust me: I see. But running away from the stress of financial planning only causes that stress to pile up and turn your financial situation into something you are not proud to speak to your parents or friends about.

And while not all millennials avoid taking care of their finances, they shouldn’t pat themselves on the back just yet. Because many save their money aimlessly without proactive financial planning. They have no purpose for the money they save, and they often spend themselves on things they don’t really need (or want) instead of using them to fund a life goal like buying a home or saving for money retirement.

Fortunately, all hope is not lost when wondering how to plan for your financial success. The key is to start today. Don’t put it off with that tired chorus of “It may wait until tomorrow”. Your future you would agree that it can’t wait. Here are four proactive financial planning steps you can take now to get things on track:

1. Set goals and start saving for them today.

Goal setting in financial planning isn’t just about saving your money for a rainy day. It is important to be more proactive in your planning by setting specific financial goals for yourself. Perhaps you dream of one day going to drama school or buying a recording device to help with your podcast side appearance (don’t you all?) Whatever it is, setting a goal and determining the amount of dollars you need to save will help make that dream a tangible reality.

Your goals don’t have to be big and lofty. Also, think about the short and medium goals you have in life so that your financial plan doesn’t feel too restrictive. For me, it’s collecting limited edition sneakers. This goal is more expensive than I’d like to admit, so I strategically plan these purchases by saving on a monthly basis.

That brings us to how to set and achieve financial goals. If you automate your savings on a monthly basis so that you save small amounts of money on a regular basis (without using brainpower to do so), you will eliminate the risk of human error and be on your way to success.

2. Create an emergency fund, but don’t abuse it.

If you’ve taken a personal finance course, you probably know the importance of an emergency fund to your overall financial health. Even so, 53% of millennials surveyed in the National Financial Capability Study did not have an emergency fund that could cover expenses for even three months. An emergency fund gives you a foundation from which to make financial decisions – all without the feeling of stepping off a cliff into the unknown. It also provides security if something happens that is preventing you from making money. Remember, no matter how invincible we consider ourselves, it is important to plan for these potential obstacles.

You are probably wondering how much you can save for this purpose. The suggested amount for the Emergency Fund to save for is three to five months of living expenses (think rent, utilities, phone bills, etc) in the form of cash. It is advisable to invest the fund with an online bank, which often has higher interest rates than traditional stationary institutions. Do not put the money in an investment account that would expose it to market volatility. Yes, that means that you don’t put all of your emergency funds on cryptocurrency investment platforms. This money should be easily accessible when needed – not tied up in an account that you have not had access to for 20 years.

And while it can feel good to have a ton of money in your emergency fund, you don’t have to add it indefinitely. Holding too much cash can be detrimental to your financial goals because the best thing you have as an investor is time. So only adjust your emergency fund if your monthly expenses go up, you get a raise, or you attract family members.

3. Pay off your debt through interest rate.

If you are dealing with multiple types of debt, such as: B. Credit card and student loan debt, it can be overwhelming to come up with a plan to pay it off while saving up for other high goals (e.g. to 90). The first step is to focus on high-yield debt, which is anything that charges between 6% and 8% interest. This is because many financial decisions are based on opportunity cost and you cannot guarantee that you will get such a return on your money by investing it elsewhere instead of paying off the debt.

To get off your debts quickly and save money in the process, you should follow the debt avalanche method. Start by listing your debts from the highest to the lowest interest rate. Then pay the minimums on all of your debts, but make any additional payments on the high-yield debt that comes first on your list. As you start working off the debts on your list, you can do more proactive financial planning and add new goals to your regular savings plan.

4. Start a retirement plan.

You’re young and retirement probably still feels light years away. Is it really time to start retirement planning? Absolutely, 100%, yes. The benefits of early retirement far outweigh any reasons holding you back – even if it’s an unnecessarily flashy car with a high monthly payment or a fancy vacation abroad.

If your employer offers a 401 (k) and matches your contributions, take advantage of this. It’s basically free money. If you can, maximize your 401 (k) to meet employer comparison and experience some significant tax breaks that no other investment account can offer. Your contributions can be deducted directly from your paycheck, which will reduce your taxable income and potentially put you in a lower tax bracket. Even better, these pre-tax dollars are tax deferred until you decide to withdraw them when you retire.

If for some reason your company doesn’t offer a 401 (k), you can open a Roth IRA yourself and maximize your contributions – as long as you’re below the IRS income limit. In 2021, that limit is $ 140,000 for individuals and $ 208,000 for married people filing their taxes together. Whether you’re using a 401 (k) or Roth IRA (or other retirement account), it’s important to start saving as soon as possible. Time is your greatest asset.

When you start proactive financial planning, you start programming your success. I speak from experience when I say the calm that comes with it is second to none. Regardless of where you are on your financial journey, start planning today for confidence in your financial health in the near and distant future. Your future self will thank you.

Disclosure: This material has been prepared for informational purposes only and should not be used as investment, tax, legal, or accounting advice. All investments involve risks. Past performance is no guarantee of future results. Diversification does not secure a profit or guarantee a loss. You should consult your own tax, legal, and accounting advisor.

Photo by Eugenio Marongiu / Shutterstock

Odaro Aisueni is a first generation Nigerian American who grew up in Houston, Texas and currently works as a financial planner. is working Plancorp, a full-service wealth management company serving families in 44 states. Odaro attended Texas Tech University where he studied personal finance planning. There he developed a passion for financial education. His goal now is to equip young generations with financial knowledge and offer financial truths with a mix of entertainment.

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