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Financial Planning Tips for Millennials

If you’re a Millennial, know this about personal financial planning: Time is still on your side, but it won’t be for much longer.

Here are nine tips to help give you the confidence to shed whatever doubts may be holding you back. The most important rule of financial planning is: Start now and start somewhere.

1. If you are living paycheck-to-paycheck, before you do anything else, stop that. Figure out where you can cut costs, even if it is by a few dollars a week. The best way to do this is to start tracking where you are spending your money. That will enable you to begin saving right away without having to make more money.

2. Save at least three months’ pay, so that you have a cushion to tap in for an emergency cash. (You’ll soon work on saving more, but start there.) Think about saving your emergency funds in a high-yield savings account where you can earn a higher interest rate than most traditional bank savings accounts offer.

3. Save the maximum you can in retirement accounts, up to the amount matched by your company, or up to the amount you can put aside tax-free in an Individual Retirement Account.

4. Diversify your investments. Nobel Prize-winning science suggests that diversifying your investments into broad-based stock mutual funds will help reduce your risk. When the market drops, as it is bound to, you may minimize your losses if you are diversified.

5. Invest in low-cost funds. When you are buying mutual funds, keep in mind that the best predictor of a good return is how low the fees are.

6. As you meet your other savings goals and as your income increases, add to your savings outside your retirement account. Having a larger pool of money to invest in something bigger when the time is right is invaluable. That something could be a house, a business or your children’s education.

7. Take care of the basics for your family. You probably don’t have enough money saved yet to take care of your family if something happens to you. Term life insurance is inexpensive when you’re young. Likewise, your estate plan doesn’t need to be complicated, but you need one.

8. Don’t get fancy. You’ll hear a lot of people brag about the killing they made in the market in an instant or the latest hot investment, like cryptocurrencies. Keep in mind that for every successful bet they made, there are a few duds they’ve forgotten or don’t mention. If you want to dabble in risky investments, make sure that you don’t bet more than you can afford to lose.

9. Personal loans are not always a bad idea, as long as you work with a reputable lender, and use the loan for the right purposes and able to pay it back in timely manner, then a personal loan can be a fast smart option.

It can also make sense to use a personal loan for larger purchases that you don’t want to charge on your credit card. Some lenders offer cash loans up to $5,000, and the fixed monthly payments are easier to budget better than credit cards with compound interest. For more information

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