Nine Financial Decisions Millennials Need to Make Right Now: What Are You Doing with Your Paycheck?

By Art Rainer | Article from June 2015

A large portion of the Millennials has now entered the workforce. And many are now looking at their paychecks and wondering, “Now what? What do I do with my money?” Millennials have some very important decisions to make that will dramatically alter their financial future.


Here are 9 financial decisions that Millennials need to make right now:

1.  Decide to live within your means.

It starts here. This is the key to accomplishing any of your financial goals. Stop considering the number on your paycheck as the amount you are able to spend. Living paycheck-to-paycheck ensures that you will have financial troubles in the present and future.

2.  Decide to give.

Commit to give away a percentage of every paycheck. This means that as your paycheck increases, so does the amount you give away. There are many great reasons to give, one of which is that God tells us to do so in the Bible. Where do you start? I think donating 10% of your gross (before taxes) income to your local church is a great place to start.

3.  Decide to have an emergency fund.

You never know what will happen in the future. Set aside at least 6 months of living expenses in a savings account. This will give you a cushion when an unforeseen, costly event occurs.

4.  Decide to stop carrying credit card balances.

Carrying credit card balances is incredibly costly. There are few places where you could end up paying more for a balance than a credit card. Let’s assume that you carry an average of $10,000 on your credit cards. If you interest rate is an unexceptional 20%, you will end up paying $2,000 over a year just to carry that balance. You spend $2,000 for nothing.

5.  Decide to pay off debt quickly.

Do you want financial freedom later in life? Get aggressive about paying off debt, including your mortgage. Start with whatever balances have the highest interest rates. These are typically your credit cards.

6.  Decide to save for retirement.

If you are not setting aside money for retirement, you are missing a huge opportunity. Retirement savings works best over many years. If your organization allows you to put money into a retirement plan like a 401(k) or 403(b), take advantage of it. Even if you are only able to set aside 1% of your gross income, start now. It may feel so far off that the priority does not seem very high, ,but your future self will be grateful if you start acting now.

7.  Decide not to waste money unnecessarily on depreciating assets.

A depreciating asset is any item whereby its value is reduced over time. For Millennials, one of the most common unnecessary spending on a depreciating asset occurs with their car. There is nothing wrong with a nice car, if you can afford it. But many Millennials overindulge and end up spending excessive amounts of money on cars. And when they sell it, most of the money will not be recouped.

8.  Decide what you would like to provide your kids.

Do you want to pay for your kids’ college? Do you want to buy them their first car? For many, these dreams will not be possible because of a lack of planning. Start setting aside money for these large expenditures now while the kids are still in diapers.

9.  Decide to leverage time.

For your financial goals, the value of long-term discipline cannot be overstated. Right now, you have time. But it will go quickly. In a blink of an eye, your kids will be going to college, and you will be facing retirement. These moments do not have to be a financially stressful time for you. Be financially disciplined now so that you can experience financial freedom later.

What about you? What are some of your personal financial successes or mistakes?