8 Steps to Millennial Financial Freedom

1) Measure monthly expenses. Build an emergency fund sufficient to live off of for 3-6 months if your current income ceased

    – This fund is a safety net and crucial for financial independence

    – Lose your job? Want to change careers? Stock market crash? You have a financial buffer and have bought yourself time to figure out a next move

2) Max your 401(k) or equivalent employee contribution

    – Doing anything less is leaving money on the table

3) Pay your credit card balance in full every month

    – 15-20% interest is a terrible deal for you and a great deal for a lender

    – Perceive your credit card as debit or cash.

    – Use it as a tool to build credit scores and for reward programs

4) Buy inexpensive, diversified ETFs or mutual funds tracking total markets (i.e. Schwab Broad Market ETF or Vanguard Target Funds)

    – Plan your to leave your investments Invest as if the stock market is going to close for five years

    – The market is and always will be volatile, understand the bigger picture

5) Maximize annual contribution limits for tax-advantaged retirement vehicles like the ROTH IRA, SEP and 529 accounts

    – These policies exist to help lower/middle class families prepare for their future

    – With pension shortcomings, retirement planning is a responsibility increasingly falling on the shoulders of individuals

6) Be wary of fees and motives from financial institutions

    – Passively managed funds outperform actively managed funds, particularly over time horizons greater than a few years

    – Use fee-only Financial Advisors and ensure they commit to fiduciary standards

7) Avoid individual securities

    – Person on the other side of the table always has more information than you do

    – Emotions can cloud sound investing

8) Investing is not the same as saving

    – Cover monthly expenses, allocate 20% to savings and spend the rest as you choose

    – Be cautious of recurring expenses. Wealth builds wealth

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