Some resolutions for millennials

I thought I might start off January with some financial resolutions for people at different stages of life, based upon what seems to be difficult but achievable. I’m not going to suggest lose weight and get more exercise because I’m going to try to come up with things you and I might actually do. I’ll disclose a secret and say I’m not actually a millennial. But one lives here, and I meet with millennials fairly frequently. Even if you’re not a millenial, some of these will still apply. So here goes:

1. I will calm down about my student loans. Just about everyone has them, and everyone hates them. It’s probably too late to do anything about what you borrowed, now, so you have to think through how to manage them. They’re not shameful—they were an investment you made in getting a better job. If they’re fairly low, say under $30,000, it’s really the equivalent of paying off a car over 10 years (rather than 3 or 5 for an actual car). If they’re higher, hopefully you have selected a career that made it worthwhile—if not, you should definitely look into the various programs to bring down the monthly payment.
2. I will assess whether I should pay off my loans early. If your loans are the subsidized kind (under 4%) you’ll probably be better off investing and saving rather than rushing to pay them off—in the long run, the same money judiciously invested will earn more than the loan is costing you.
3. I’ll make sensibly frugal choices. Don’t buy an expensive car (or even a new one) until you’ve worked out a budget. Watch the rent you commit to paying. Try to downshift spending without denying yourself the fun—go out, but maybe drink beer instead of a craft cocktail. Meet for drinks instead of dinner. Choose a medium priced restaurant and do your gourmet eating and drinking at home—you can buy a pretty darn good bottle of wine for the cost of a glass or two at a restaurant. You get the idea.
4. I’ll contribute to my retirement plan the day I’m eligible. There will never be a better time in the future when it will be easier. It’s always hard. If you never get used to that 10%, you won’t miss it as much.
5. I’ll think of that retirement account as gone and locked up. Don’t borrow from it and don’t even think of cashing it in when you change jobs.
6. I’ll build up an emergency fund before I take a vacation. Or buy a house. Or have kids.
7. I’ll commit to paying off my credit cards every month, and pay attention to how to maximize rewards. Play that right and you’ll be able to take more vacations.
8. I’ll manage my career. Think of your career as an investment asset—get all the training you can to continuously upgrade skills. Everyone gets a terrible boss someday, and everyone has co-workers they can’t stand. Get interpersonal skills training, read up on coping skills, and always have a plan B for moving on. Go to conferences and networking events in your field, and learn as much as you can about marketing. If you’re dreaming about a creative or independent job, realize that at least 60% of that job will be selling the product, not creating the product.
9. Insofar as possible, I won’t quit without lining up another job. If I get fired, I’ll find career services or a job hunting group to get me back on my feet as soon as possible. Losing a job is debilitating and depressing, even if you hate it. Finding a new one is a part time job. Plan for it.
10. I’ll pay attention to my employee benefits. Employee benefits can be worth 1/3 of your salary. Does the job offer a Flexible Spending Account? Disability coverage? Free life insurance? How much vacation time? What’s the deductible on the health insurance? Decent or crappy investment options in the 401k? Good employer match, bad, or none? Will they pay for more education (which I will definitely avail myself of)? These are things that you should know before you accept a job, because they’re potentially worth thousands to you. I can’t tell you the number of people I’ve seen who have paid for a lawyer to produce a will (or not made one at all) when their employer offers low cost legal service. Just go light your cigar with a $500 bill.
11. I’ll set savings and required payments on autopilot by setting up auto withdrawals. Making a decision once, by setting them up, is more likely to continue (on time) than if you have to make a decision every month. You can always cancel the auto-pay if you absolutely must.
12. I’ll learn about investing. Even if you’re a good saver, you need to educate yourself about investing. I can almost guarantee you didn’t learn about it in school, and unless your parents were exceptional, you didn’t learn it at home either. The only way is self-study—and don’t believe anything you hear at one of those free “investing” lunches—nothing in the investment world is EVER free.

Happy new year and best wishes for 2018.