The following column from Jennifer Pagliara, CapWealth Senior Vice President and Financial Advisor, was posted by The Tennessean on Jan. 5, 2018.
Happy new year! Are you ready to tackle the usual resolutions to improve the many aspects of your life? I’m sure you’ve got a list of all the things you want to (or need to) do this year to achieve your goals. Let me help you with a few “don’ts” to aid your yearlong journey.
1. Don’t put off saving — not even one more day. You likely have resolutions related to spending less and paying off debt, and maybe you have one related to setting and sticking to a budget. But an absolutely necessary step toward furthering your financial position is to start saving today! (The key word being “today!”) The power of compounding interest is mind-blowingly real — the earlier you start, the more mind-blowing. I can’t stress this enough to my millennial cohorts. If you think you’re too young or don’t have enough money, you’re wrong. Even putting away a small amount each month gains you an advantage for your future. You can actually begin investing in many mutual funds for as little as $50.
2. Don’t miss out on the new available tax credits and savings opportunities in 2018. With the recent tax reform came a number of changes to available credits and savings opportunities that millennials can reap benefits from. One particular note of interest for many of my clients pertains to 529 savings plans. Previously applicable only for college savings, these plans now allow for tax-free withdrawals for K-12 private school education. It would behoove parents (of all ages) to check with their accountants and ensure that they are up to speed on this and other applicable changes resulting from the new tax bill.
3. Don’t let student debt damper your dreams of financial freedom. Student debt is a looming displeasure for many millennials. A recent Nerdwallet report noted that the median student loan debt for a person who has attended some college or graduated from college is more than $49,000. Carrying the burden such a bulk can be overwhelming and may discourage resolutions to “get out of debt” in the new year. Rather than looking at the debt in its entirety, focus on paying off a particular amount each year, and divide that by 12 months. For example, a resolution to pay off $5,000 per year equates to around $415 per month. With just a little diligence in paying this amount (or any other amount you deem doable) each month, you will be sure to hit the annual goal and still take a chunk out of the overall debt.
4. Don’t “just do it.” (Plan for it!) I’ve said it before, and I’ll say it again. You need a financial plan. A plan allows millennials (and others) to set goals for your financial future and monitor progress along the way to ensure you stay on track. Life goes faster than you think, and with huge life events happening for millennials — launching careers, getting married, buying houses, having children — it’s easy to let time get away from you and miss out on the chance to properly prepare for future needs, like your children’s education and your own retirement. Success requires careful thought, discipline and some savvy. If you don’t have it, find a financial adviser that does and keep in touch.
5. Don’t let fear hold you back. Fear can be a roadblock to accomplishing great things. It can hamper the opportunity to try something new, to advance in one’s career or to find that special someone. Fear can also cause people to miss out on advantages others are capitalizing on now. This certainly holds true for those who let fear and worry keep them out of the market last year. It’s no secret that volatility exists within the market; ups and downs are guaranteed. Historically, however, the market has persevered upward, and the longer one is invested in the market, the more time there is to make up market declines and unanticipated sub-par returns. So, if you aren’t invested now, don’t let fear continue to keep you out of the long-term advantage you have at this point of your life.
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.