7 money-saving tips millennials need

According to a 2014 Wells Fargo Millennial Study, only slightly more than half of millennials (ages 18 to 32) have started saving for retirement, about four in 10 feel overwhelmed by debt obligations, the majority are living paycheck to paycheck, and a quarter aren’t sure where their money is invested.

Coming of age in an era of shaky job growth has not been easy, but not saving money is not an option. Two New Jersey financial advisers have given their tips and tricks for young people to start thinking about and actually saving money.

1. Ask yourself the question “Where do you see yourself in five or 10 years?” “If you’re not sure about some of these things, definitely go home and think about just a general plan. What do you want to accomplish in the next year or five years? What do you want your retirement account savings to grow to?” said Denny Frasiolas, firm partner and financial adviser at Retirement Income Advisors LLC in Woodbridge. “Answering the tough questions is how we reach those goals.”

Brookdale Community College student Shanel Anderson, 24, of Manalapan, said she hasn’t started to think about saving money yet.

“A lot of young people I feel like in our generation, and I feel like this for myself, (have) a problem saving,” she said. “But for me, I’m realizing as I’m getting older it’s important to save because, God forbid there’s an emergency, or God forbid your car breaks down, or you want to go on vacation.”

2. Create a budget. “They (millennials) should set up a budget so they know what their monthly expenses are, and figure out how much is left over for lifestyle and savings. Definitely a budget is very important for people that age,” Frasiolas said. “It’s important to think about doing that on their own. There are no classes or courses on personal finances, not in high school and not in college. They have to learn as they go.”

Another Brookdale student, Matthew Yee, 20, of Eatontown, said he thinks college courses on personal finance should be mandatory.

“This is my second year at Brookdale, and all my education career up to this point I haven’t learned anything in the financial field at all,” he said. “I can tell you everything you need to know about the Pythagorean theorem but I couldn’t tell you, until I got out of high school, what a tax was, why we’re taxed, how much we’re taxed, how to balance a checkbook, how to do this stuff in real life that we would need.”

Luke Carey, a certified public accountant and senior financial adviser at Lighthouse Financial Advisors Inc. said a good tip is to be more conscious of what you’re buying.

“A good personal philosophy is spend more to buy quality. Nothing’s more expensive then having to buy the same thing twice,” he said.

Chenell Tull, a 27-year-old Philadelphia resident writes a blog geared toward helping millennials save money at BrightCents.com. She suggests not carrying a on balance on credit cards because “the interest in a killer,” and pre-gaming before heading out to bars or clubs, saving money on drinks.

3. Set up some kind of bank account besides a traditional savings account. “Whether it’s an IRA, Roth IRA, investments or a brokerage account,” Frasiolas said. “Even if they (millennials) don’t have a lot of money to start with, if you know in your budget you have $400 left over, maybe you can take $100 (to contribute) and you’d be surprised over the years how much that can grow.”

4. Pay off student loans and debt. Carey recommends paying down credit cards and debt that have the highest interest rates first.

“Credit cards vary in what the interest rate is. All credit cards have their own terms. Always pay down the higher rate (credit card) first, beyond what’s required,” he said. “The nice thing is student loans usually have a lower (interest) rate than credit cards.”

Anderson said she has student loans and financial aid to help her attend Brookdale, but she’s continuing her education at Georgian Court University next year, so she’s nervous about falling deeper into debt.

“When we graduate and we want to further our education then we worry about, you know, we’re already in debt already so we’re going to be in more debt,” she said. “You’re really worried. Like, I have an associate’s (degree) and I can’t get a job now. If I get a bachelor’s (degree), it’s going to help but it’s going to put me in more debt.”

5. If your work offers a 401(k) match option, take advantage of it. If you skip the match, you’re turning down free money from your employer. “If all else fails, that’s the best place to start,” Frasiolas said. “Nowhere else in the investment world will someone match your contribution.”

According to Smart401(k).com, a company “match” is not mandatory, it’s an employee enticement. A company might match an employee’s contribution to his or her 401(k) up to a certain percentage.

Carey said that typically, the rule is to save 10 percent of your income. He recommends contributing what your employer matches to your job’s retirement account, and then put the remaining percentage into an independent retirement account. He likes the Roth IRA option.

Contributions to a Roth IRA can be withdrawn before retirement age tax-free, so the account can double as an emergency fund, Carey said.

6. Build your assets. “If it’s feasible, start looking for a way to build assets,” Frasiolas said. “Whether it’s starting a business and building business assets or buying a first home and starting to build equity in real estate,” Frasiolas said. “There’s still places throughout the country, especially in New Jersey, where (home) values have not recovered yet. There still are opportunities for 20- or 30-somethings to maybe start building wealth by purchasing properties on the cheap. ... You could build instant wealth right away.”

7.Check if you qualify for theRetirement Savings Contributions Credit (Saver’s Credit). You may be able to take a tax credit if you make below a certain income and make eligible contributions to an IRA or employer-sponsored retirement plan.

“You can actually get paid to save into a retirement account,” Carey said.

Devin Loring; 732-643-4035; dloring@app.com

MILLENNIALS AND MONEY

•42 percent of millennials say debt is their biggest financial concern.

•43 percent of millennials have a bank savings account or CD.

•37 percent have a Roth or traditional IRA.

•5 percent of millennials are not saving for retirement.

•46 percent are only saving 1 percent to 5 percent of their income.

•25 percent of millennials are not sure what percentage of their retirement savings are currently invested in stocks or mutual funds.

Source: 2014 Wells Fargo Millennial Study