5 financial moves millennials won’t regret making ~ Auto accident attorney

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We elder millennials (as Iliza Shlesinger calls them) are inching closer to our 40s. We’re getting promoted to management positions, buying homes, and are just as likely to be at a PTA meeting as we are to be at a beer garden. That means it’s especially important for millennials to make grown-up financial moves to match their increasingly grown-up lives.

Here are some smart actions you can take with your money today that can set you up for greater security in the future:

Build an emergency fund

Forty percent of adults couldn’t afford a $400 emergency expense, according to the Federal Reserve’s 2017 Report on the Economic Well-Being of U.S. Households. A solid emergency fund is the foundation of financial security. It allows you to deal with unexpected expenses — like home and car repairs or medical bills — without having to take on credit card debt.

How you can start your emergency fund:

Open a high-yield online savings account where you’re earning around 2 percent. You want this money to earn some interest, but also be easy to access when you need it. But don’t keep the money in your checking account, because it’ll be too easy to tap into for non-emergencies.
Fund the account with enough money to cover at least one month of expenses before paying down high-interest rate debt. Then pay down your debt. After that come back to building your emergency savings. Your goal should be to have at least three months’ worth of expenses stashed away.
Don’t touch that money unless it’s a real emergency. Repairing your car so you can commute to work is an emergency. Buying a last-minute gift isn’t.
Replenish the money in the account as you spend it. This may take a while, depending on your situation. The important thing is that you’re saving as much as you can.

Save for retirement

Many millennials aren’t going to get pensions like previous generations did when they retired. It’s on us to save up for ourselves. While some expenses get smaller when you retire, like housing costs if you downsize or pay off your mortgage, other expenses get bigger, like health care. You never know what your future will look like, so the best way you can prepare is by saving as much as you can now.

The earlier you invest in retirement accounts, the longer your investments will have to grow because they’ll earn compound interest. Investing for a long time can also help reduce the effect that market volatility has on your overall returns.

How you can start saving for retirement:

If your employer offers a tax-advantaged retirement account, like a 401(k), 403(b), or a thrift savings plan, contribute enough at least to get the full employer match. You won’t have to pay income taxes on anything you contribute until you withdraw that money in retirement, and the employer match is free money.
If you’re self-employed, look into a tax-advantaged account like a SEP-IRA. You can open this type of account through a brokerage or robo-advisor.
Next, open a Roth IRA, (as long as your income doesn’t exceed the Roth limits). You can open an IRA through a brokerage or robo-advisor. Max out your IRA by contributing $5,500 for 2018 (you have until April 15, 2019, to make 2018 contributions). The maximum contribution has increased to $6,000 for 2019.
If you have extra money available to save more, go back to your work retirement account and increase your contributions until you’re maxing it out. You can contribute up to $18,500 in 2018 and up to $19,000 in 2019. You may want to set an alert on your calendar to increase your contributions by 1 percent every 6 months.

Why life insurance

Life insurance is a financial safety net for your partner, your kids, your life...

Contribute to a health savings account

One of the most overlooked ways to lower your taxable income, save on medical costs and invest for the future is in a health savings account (HSA). If your health insurance plan is a high deductible health plan, or HDHP, that is eligible for an HSA you should seriously consider contributing. Many employers will actually incentivize employees to choose this type of health insurance plan by contributing to your HSA.

Keep in mind that you may not have an HDHP as an option for health insurance through your employer. Also, if you or one of your dependents has a chronic health issue, HDHPs may be more expensive than other insurance plans.

Why HSAs can be a smart money move:

They offer a triple tax benefit. You contribute pre-tax income to the account. Then, when the account balance reaches a certain amount, you can invest the money in your HSA and any growth is tax-deferred. Finally, if you withdraw money to pay for qualified medical expenses, it’s tax-free.
They can serve as a type of emergency fund. Because you can reimburse yourself for medical expenses you incurred a long time ago (just remember to save your receipts), your HSA allows you to free up cash for emergencies. Here’s an example: You paid out of pocket for Lasik eye surgery a few years ago. Now you’re facing a $1,000 car repair. You can reimburse yourself from your HSA for the cost of Lasik by submitting your receipts, giving you cash to now spend on your car.
They can serve as a retirement account. Some of my clients actually max out their HSAs every year, invest the money, and plan on not making any withdrawals for decades. Once you turn 65, you can withdraw money from your HSA for any reason without paying a penalty. If your withdrawals are for qualified medical expenses, you won’t pay tax on them. However, you would have to pay income tax on withdrawals for any other reason. Since we expect health care costs to be highest, at or near retirement, this can be a way to help preserve your retirement accounts by having an HSA earmarked for medical costs.

Buy an individual life insurance policy

If anyone is dependent on your income (your kids or a spouse), a life insurance policy can help financially protect them.

You think you might have coverage because of a group life insurance policy through work, but often times this policy only protects one to two times your salary. That may not be enough for families with young children. Additionally, coverage is often job dependent so when you leave your job, it can end — making individual coverage still important.

Even stay-at-home parents may need life insurance. Though you don’t earn an income, the work you do to care for your home and children has monetary value and if you were to pass away unexpectedly, your spouse would have to hire a nanny or pay for daycare costs to keep working full time.

You may not need any complicated kind of life insurance like whole life or universal life. A simple 20- or 30-year individual term life insurance policy, which would cover you for a set period (say, until your kids grow up). For example, a healthy 35-year old man could get a 30-year, $500,000 term life insurance plan for around $41 a month.

Create an estate plan

No one likes to think about their death, but millennials are reaching an age where they have children, homes, life insurance policies, and other assets. It’s important to put a plan into place for your money and document your wishes if something were to happen to you. An estate plan allows you to choose who will help make financial decisions (by naming a power of attorney) and medical decisions (by creating a health care directive or living will) for you if you become incapacitated. And if you have kids, you’d specify who their guardian would be in your will.

Estate plans can be set up to benefit your heirs and charitable causes that are important to you, in a way that lowers your tax burden. You can also reduce the number of assets that must go through probate, a lengthy court-supervised process where your assets are distributed.

How you can create an estate plan:

Consider Trust & Will, an online service to create a legal will in minutes. (Eligible Haven Term policyholders receive a will plus a year of unlimited updates at no additional cost.)
Consult an estate attorney to begin drafting legal documents like wills, health care directive, and powers of attorney. The best place to start is by seeing if your employer offers group legal coverage as an employee benefit.
Talk to a financial planner, who can also help you take a comprehensive look at your assets and suggest estate planning methods. You can find a fee-only financial planner in your area through the National Association of Personal Financial Advisors.

Building an emergency fund, saving for retirement, contributing to a health savings account if you qualify, buying life insurance to help protect your family and creating an estate plan are no-regret steps into financial adulthood. Make enough of these grown-up moves and you’ll be known as a money-savvy elder millennial.

Sophia Bera, CFP® is not your father’s financial planner. Her accolades include the “Top 40 Under 40” by Investment News and “10 of the Best Personal Finance Experts on Twitter.” She’s been quoted in the New York Times, Wall Street Journal, Forbes, Fortune, Business Insider, CNBC, Huffington Post, LifeHacker, and more. When she’s not working from a coffee shop, you can find her eating a breakfast taco while listening to a podcast in Austin, Texas.

Haven Life Insurance Agency (Haven Life) does not provide tax, legal or investment advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal, or investment advice. You should consult your own tax, legal, and investment advisors before engaging in any transaction. Individuals involved in the estate planning process should work with an estate planning team, including their own personal legal or tax counsel.

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