Millennials and Gen Z might be different in a lot of aspects, but when it comes to financial planning, they both are the same. Gen Z is a generation that relies heavily on social media for a lot of their decisions. However, both generations need to understand that taking advice from professionals and reputable fund rating agencies can go a long way in creating a feasible financial plan.
In this article, we have focused on 6 Financial Planning Tips for Millennials/Gen Z.
6 Tips to Follow for Financial Planning
1. Short-term and long-term goals
Defining your short-term and long-term financial goals is the first step in financial planning. The problem with millennials is that owing to their age demographic, immediate needs and goals are first placed. However, it is crucial to recognize both short and long-term goals if you are looking for a wholesome financial plan. Writing down goals and tracking their progress is a great way to keep your goals in focus.
2. Structure savings plan
Whatever goal you have decided upon, it is important to develop a structured savings plan for your future. It is advised to direct approx. 3 to 10 percent of your income to a savings fund. Automatic deduction from your paycheck can help you maintain this savings fund without any distractions.
3. Work on building a spending plan
In this technical age, there are a ton of online programs and apps that can help you with your budgeting plans. But remember, they are just tracking tools, they cannot stop you from unnecessarily spending your money. Create a spending plan that aligns with your short and long-term financial goals.
4. Debt vs Investing
It is a common misconception that debt payment needs to be the priority. It is important to understand that not all debts have the same rate of interest. Focus on paying off debts that have non-deductible interests and have a high-interest rate. Compare your after-tax return on investment to the after-tax cost of debt and if the previous is higher, consider investing your money.
5. Know about investment options
Before investing your money, you need to do detailed research on the types of investment plans and their pros and cons. You should contact a qualified advisor to understand the intricacies of investment and choose a plan accordingly. You should choose plans that are well suited to your situation and the goal you are aspiring for.
6. Build your financial knowledge base
If you are looking to understand the basics of financial planning, you need to build your knowledge about various financial topics. Financial literacy should be a priority for both Millennials and Gen Z. Communicating with people who are dealing in the financial sector can help in improving your financial knowledge.
To conclude, if you keep an eye on the above 6 tips, your chances of building a great financial plan are quite high. Your plan will not only be great but it also will be a feasible one. So, this was a brief about the Financial Planning Tips for Millennials/Gen Z.
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