Financial freedom for millennials may seem like a distant goal. However, while the journey can be challenging, it's within reach with the right resources and support.
BNC National Bank is dedicated to equipping millennials with the knowledge and resources they need to build a solid financial base that helps them more easily navigate their finances and life’s milestones.
Here, we’re delving into actionable strategies for achieving financial freedom for millennials and highlighting how we’re committed to supporting them every step of the way as they pave a path to a more secure and rewarding future.
Understanding Financial Freedom for Millennials
Financial freedom looks a little different for everyone—it could mean the ability to vacation frequently, pay off your student loans, own a house, or all of the above. Regardless of what it looks like for you, one thing rings true: Financial freedom means having enough savings and cash flow to live comfortably and support your desired lifestyle without financial stress.
It's crucial for millennials to build a solid savings base and manage cash flow to fund both everyday expenses and future aspirations, such as a house, family, or retirement. However, millennials currently face several barriers to financial freedom, including economic uncertainty, rising living costs, student loan debt, and fluctuating job markets.
These barriers have a significant impact on millennials, making it difficult for them to achieve financial freedom because they may be directing every dollar toward simply staying afloat in a tough economy. While this can be overwhelming and make financial freedom for millennials seem like a pipe dream, there are ways to overcome these barriers.
Overcoming Barriers with Tailored Financial Tools
Interested in starting a journey toward financial freedom? Here’s what we recommend:
Manage your debts.
Having debt hanging over your head does more than take a toll on your mental health—it can also wreak havoc on your finances. And if you have several different accounts that you’re making payments on, it can be difficult to see that your repayment efforts are having any impact.
Effective debt management involves creating a structured repayment plan and utilizing tools to track and reduce debt. It can be scary staring down how much debt you need to pay off, but it’s an important step in getting your debt under control.
Once you have all that information in one place, make a plan for how you’ll address your debts. While it can seem like you’ll get more relief by paying off your smallest debts first, it can be more beneficial to focus on your highest-interest debts first because they cost you the most money each month.
Remember that you don’t have to go through this alone. Leverage the expertise and support of your community bank. At BNC National Bank, we offer personalized strategies and financial tools to help you manage and eliminate debt more efficiently.
Consider loan options.
A personal loan can be used for a wide range of purposes, from financial assistance for major life events, such as home renovations or education, to debt consolidation to emergency expenses. Personal loans are often a great option to access a large amount of money without the fees or high interest rates of cash advances or credit cards.
Before applying for a loan, consider your financial health and if you can take on more debt. To get started, take a look at your credit report and determine your debt-to-income ratio. Then, determine how much you truly need to borrow. Too little, and you might not be able to achieve your goals. Too much, and you’ll be paying interest on funds that you didn’t need.
Once you’ve determined if you can comfortably take on more debt and how much you need, evaluate your lenders. For example, at BNC National Bank, you’ll find tailored loan options with flexible terms and competitive rates that support financial freedom for millennials.
Stay disciplined.
Financial discipline is critical to achieving financial freedom. Continuing to use credit cards and living beyond your means while trying to pay down debts can be a difficult juggling routine that can make you fall even more behind.
To stay financially disciplined, start by developing a consistent budgeting routine that includes tracking your income and expenses. Writing your budget down and tracking your expenses will help you better visualize where your money is going and the patterns that are forming over time. Your budget shouldn’t be set in stone: As you pay off your debts and your income changes, your budget should also evolve.
Another key factor of staying financially disciplined is regularly setting aside savings to stay on track with your financial goals. It can help to schedule automatic withdrawals so you don’t have to remember to transfer money into your savings account each week or month.
Align your accounts to fit your needs.
To make the most of your money, it’s essential to understand the different account types available to you and their benefits:
- Standard checking accounts offer essential features, such as overdraft protection, which can help manage your daily transactions smoothly.
- No overdraft accounts, on the other hand, prevent transactions if funds are insufficient, helping you avoid potential overdraft fees.
- Premium accounts come with additional features that are designed to provide more flexibility and convenience, such as higher interest rates, exclusive benefits, and enhanced financial management tools.
Saving and Investing for Financial Freedom
Investing is essential for financial freedom and building your wealth. Starting early and finding the right balance between risk and return can set you up for financial freedom—especially when you diversify your investments and match them with your goals.
First, you can’t have good returns without some degree of risk. These two concepts are directly related, with higher returns often involving higher risks and smaller risks resulting in smaller returns. Diversification is a common strategy that helps manage risk by spreading investments across various asset classes, such as cash (or cash equivalents), stocks, and bonds. Investors often blend these assets so their portfolio doesn’t consist of only one asset class.
Next, a longer investment horizon can result in larger profits from compounding interest compared to a short-term investment. This is why it’s important to start saving for retirement early—a small investment early on can lead to high returns later.
Partnering with a community bank can open up your retirement savings options. We offer a few options that can lead to long-term financial freedom for millennials:
- 401(k) plans: These are employer-sponsored plans with potential matching contributions from your employer and tax benefits. These plans can help enhance your savings and maximize your retirement funds over time.
- Individual retirement accounts (IRAs): Both traditional and Roth IRAs provide tax advantages. Traditional IRAs offer tax-deferred growth with potentially deductible contributions, while Roth IRAs allow for tax-free withdrawals, offering flexibility and tax diversification.
- High-yield savings accounts: These accounts are ideal for short-term savings goals and emergency funds. They offer competitive interest rates, providing a secure way to grow your savings with minimal risk.
We’re Here to Help You on the Path to Financial Freedom
When you’re ready to get started on the path toward financial freedom, the BNC National Bank team is here to support you. Our team will help set you on the right path with personalized financial services, resources, and more. Contact us today to learn more about how we can best support you.
