Your Financial Future is on YOU


Thursday, August 30, 2018

Have you ever thought about your financial future?

Social security is expected to be exhausted in 2037 and even then, conservatives cringe at the idea of being beneficiaries at the cost of the younger generations. With prices everywhere on the rise, it’s a curious phenomenon that millennials are focused on living in the now instead of planning for the future.

There’s no way around it: millennials are in trouble. Historically high college tuition prices, steep loans with even steeper interest rates, a demanding job market, and outlandish urban lifestyles have led to post-college millennials skimping free rent off their parents in greater numbers than ever before. There are many reasons to hate being a youth today but there are still ways to save for the future. Millennials should begin to change their ways, before we become financially irredeemable.

The trick to a successful financial future is avoiding a victimology mindset. Yes, there are a lot of factors keeping millennials down, but changing the system is only half of the solution. The other half is adapting how we operate within the current economic parameters. The idea of self-investment (savings, retirement planning, and constantly improving your skill set) has been scorned and lost in an era of narcissistic finger-pointing. Yet oddly enough, self-investment may be the solution to most of our problems.

Finance is mind-numbingly complicated so it’s only natural that getting started is extremely difficult to navigate. Fortunately, we live in an age where most of the cumulative knowledge of humanity is at our fingertips. Just Google it.

Do you want to save for retirement? Save for a house in the future? Just make more money for emergencies or vacations? First, identify your goal. Long term goals, with a lifespan of 25 years at the minimum are optimal. This will be your guide in creating a savings plan. The key to accomplishing any goal is once you decide on a goal, stick to it.  

The next step is to make saving so easy and simple, you don’t even have to think about it. Economists use a formula called the time value of money. To put it simply, it’s the idea that investors would rather take money now with the promise of growth (and risk of loss) than to take that same amount of guaranteed money in the future. Using this formula, they interact with the stock market and build portfolios.

It isn’t hard to get in on the game. There are many different types of investment opportunities out there: 401k’s, IRAs, and mutual funds are all valid options, each with their own strengths, weaknesses, and penalties; but a great option for college kids is a Roth IRA. It is an investment account that taxes deposits into it, differing it from a traditional 401k which taxes withdrawals. Some employers also offer a 401k and will match a percentage of whatever you put into it. Research each type of basic account and see what fits with your goal.

Find an option that has no commission and low internal fees. Fidelity, Vanguard, T Rowe Price, and most major investment firms offer these options. Regardless of what type of account you go with, set up an auto-deposit system that will put money into it monthly. It really doesn’t matter how much is put into your investment portfolio, what matters is that the faucet is on and the flow is constant. I recommend anywhere from $5 to $25 a month for beginners.

The next step is so easy, anyone can do it: step back, have patience, and forget about your investment. As long as there is a little bit of money continuously flowing into the account, over time that $5 to $25 a month will grow and snowball into bigger and bigger figures. With an eye towards the future that can be ten years down the line but that was the plan all along.

The most important part of all of this is to start early. The great secret behind investment growth is compound interest, or for any non-financial person, interest on interest. Remember that in the age of daily political apocalypses, you are playing the long game. Don’t react to little trends and keep your time horizon in the back of your mind.

That’s it. There really is no great secret or complicated method on an entirely feasible way of saving for the future. It doesn’t cost a lot, and because of the practice of diversified portfolios, there is little risk involved for long term plans. It really is as simple as that. While it doesn’t seem like a lot, when our generation reaches retirement age, it will mean so much more when we don’t put the burden of our continued existence on our children.

Patrick is currently a student at the University of Massachusetts, Lowell and a veteran of the United States Coast Guard. When not enjoying time with his family, Pat can often be found on Twitter, rooting for the Chicago Cubs, or cooking.

The views expressed in this article are the opinion of the author and do not necessarily reflect those of Lone Conservative staff.

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About Patrick Sullivan

University of Massachusetts, Lowell

Patrick is currently a student at the University of Massachusetts, Lowell and a veteran of the United States Coast Guard. When not enjoying time with his family, Pat can often be found on Twitter, rooting for the Chicago Cubs, or cooking.

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