The following column from Jennifer Pagliara, CapWealth Senior Vice President and Financial Advisor, was posted by The Tennessean on Jan. 19, 2018.
It is easy to paint millennials as self-absorbed, flakey job-hoppers who don’t work very hard. However, through this column over the past several years, I have tried to show a different side to this often misunderstood generation.
A big part of being in your 20s and 30s is figuring out what you want to do in life. Not everyone is born knowing their purpose and exactly how to achieve it. So this can result in several job changes before someone understands the path he or she is supposed to be on.
And, millennials haven’t been afraid to take the leap when necessary. LinkedIn actually evaluated its 500 million users and found that within their first decade out of college, members of this generation changed jobs an average of four times verses Generation Xers who only changed jobs two times. And, this trend is an even bigger shift from our grandparents’ and great-grandparents’ time, when they often held only one, maybe two, jobs during their entire lifetime.
It’s interesting to consider the context behind such a trend shift. The financial crisis occurred when the majority of millennials were graduating from college, so I have to believe that had a huge impact on our churn.
There has also been less and less loyalty shown to any one specific company or even industry. So while our grandparents were likely motivated to stay put due to loyalty to the company, younger generations are more focused on finding the right fit for utilizing (and growing) their knowledge, skills and abilities. Times have certainly changed, and I don’t think it’s a negative thing.
The Bureau of Labor Statistics reports that the average American will hold 11.7 jobs between the ages of 18 and 48, but context matters here, as well, because a career change isn’t always as black and white as a doctor becoming a chef. There are parallel moves that might look like a change but are really a necessary shift to get to the next level.
With all of these likely job changes on the horizon for millennials, there are a couple of financial considerations to be aware of and prepare for.
Employer-sponsored retirement plans, such as 401(k)s , aren’t always top of mind for someone considering a transition into a new career or job. It is not uncommon for me to deal with clients who have three or four employer-sponsored retirement plans scattered around that they have never consolidated. However, I always encourage them to either combine them into a traditional IRA or try or to roll them into a new employer-sponsored retirement plan (if the plan allows).
This is important, first of all, because if you don’t handle it right away, you will forget about it and won’t monitor the investments contained within it. Secondly, you’re missing out on potential money earned, as simple compounding helps grow your money faster if you combine them all together.
Sometimes life doesn’t happen in the way we plan it, and career shifts are not always intentional. It’s important to have an emergency fund in place should you do lose your job or if you need to quit before you have another job lined up.
You will commonly hear that you need six months to one year’s worth of living expenses as an emergency fund. However, I believe that number is somewhat arbitrary. The real question you should be asking is “How much money do I need in savings to let me sleep soundly at night?” If that turns out to be six months’ worth of expenses or if it’s $25,000, then that is fantastic, but I’m less concerned with what everyone else does and what you need to feel comfortable.
Millennials may be professionally “on the move” more so than previous generations, but such diversity of experience can mold candidates who offer an equally diverse skill set, which should be an attractive quality to hiring managers in today’s fluid business environment.
Jennifer Pagliara is a senior vice president and financial adviser with CapWealth, LLC, and a proud member of the millennial generation. Her column speaks to her peers and anyone else that wants to get ahead financially.