The information in this article is up to date through tax year 2019 (taxes filed in 2020).
Studies show that millennials often feel they will not be able to reach common goals such as finding a dream job, owning a home or retiring until much later in life than their parents. The first step to achieving these goals is to get your finances in order.
Set financial goals
You have a better chance of accomplishing things you plan for if you set goals. There are long-term, intermediate and short-term financial goals. These can be saving a certain amount, paying down debt, improving your credit score, or contributing regularly to your 401(k). Revisit these goals regularly and set deadlines to keep you on track.
Build a budget
When you have a budget, you can account for every dollar you spend. Gather all necessary documents like bills, pay stubs, and receipts, and add up the totals. This will help you to identify unnecessary expenditures and get a clear picture of your finances. Even if you are comfortable with your income, setting a budget will also help you to meet your financial goals by cutting excess expenses and showing you how much of your extra income you can save or invest.
Make saving a priority
As one of your financial goals, saving can help you accomplish long term dreams. If you want to own a home or set yourself up for a comfortable retirement, placing money into a savings account is the way to go. After you determine a budget, look at how much you can realistically save each month. Then determine the total amount of your goal, factor in any interest your account will accrue, and see how long it will take you to reach your goal. Adjust your amount based on how quickly you want to reach it.If you are trying to meet your goals quickly, you might want to be more aggressive with how much you save.
Set up an emergency fund
Like saving, an emergency fund is something you save for. It is recommended to have at least three months of expenses saved in case of an emergency. Once you reach that amount, you can begin saving for other items and goals.
Pay down debt
Debt is often a necessary part of life, whether in the form of a student loan, mortgage, or car payment. If you have high-interest credit card debt, you should pay off that first. It will earn interest the fastest. Other loans, like student loans, often have a lower interest rate and are not as urgent. Remember there are three things to consider when repaying debt: (1) start with highest interest rates; (2) pay off principal first; (3) repay student loans last.
File with TaxSlayer
Millennials should file with TaxSlayer. If you are single or married and have a simple tax return (no dependents, only W-2 income) use our Simply Free Edition to file at no cost.