Millennial Planning


Most people my age spend little to no time on financial planning, but I would call myself an outlier of the Millennial generation. I have learned over recent years the significance of having a plan for your money. Last year provided young people with exposure to some of the harsh realities of investing. The harshest lesson of all may well have been given by the collapse of FTX. Perhaps, a dose of reality was needed to remind us of the risks inherent in investing, especially following a long period where even inexperienced amateurs seemed to be able to make money in the markets.

I have found that the beginning of each year is the best time to reflect on the financial goals I have accomplished and the goals I want to set for the year. As a Millennial, I have plenty of time to watch how taking advantage of tax benefits will save me thousands of dollars over time. Even though I work with very knowledgeable and experienced investment professionals, I know that I must consult with my tax accountant to obtain an expert opinion on what is best for my circumstances. Consequently, I visit with my accountant regularly to plan how I can save money on taxes.

You might be surprised to know I am giving thought to what will happen if I am not here. My New Year resolutions include establishing my will and reviewing my beneficiaries. Not only will this provide clarity to those I leave behind, but it could help avoid probate. Investopedia states, “Probate can easily cost from 3% to 7% or more of the total estate value.” According to Forbes, some studies suggest 67% of Americans do not have a will or estate plan. I do not plan to be a part of that statistic for more than a few more weeks.

In more complex situations, it is important to review your documents every 5-7 years to make sure they still align with your plans. Although it can be a tricky topic, it is important to identify and communicate your estate plan with at least one person that can help facilitate administration. It is also critical to have all your estate planning documents in a safe and accessible place. That way, you can make the grieving process simpler for your loved ones.

There are, of course, other simple planning tools that are relevant to young people, such as opening a Roth IRA as soon as they start working, contributing to a Health Savings Account (if available), and planning charitable donations in a tax-efficient way. These simple tools are well known, but it seems that young people often do not put them into practice.

In this New Year, take this time to reflect on your financial goals, whatever your age. I am sure you have a general idea of what goals you want to accomplish but clarifying and implementing the very best financial plan for you will make a big difference in the long run.

Tajaná Harrell