6 Financial Hacks for MillennialsBy Samantha Callender
Feb. 18 2015, Published 2:30 a.m. ET
Millennials undeniably have the biggest buying power of any age demographic there is. From technology to the stock market, young people are making money and spending it just as quickly.
With that said, millennial spending habits can be a bit shortsighted, leaving some vulnerable to financial instability and without a financial cushion. Her Agenda has teamed up with the folks at eHealth to provide you with some tips to keep in mind when it comes to effectively handling and managing your finances:
Maximizing Tax Deductions and Avoiding Penalties
Tax season is among us, and many millennials are filing taxes for the first time this year. While not everyone is legally required to file taxes, it is in your best interest to do so yearly. Make sure you’re keeping pay stubs, W2s and any other financial documents and receipts handy when preparing your taxes. While online filing systems may be more convenient, it never hurts to have your material reviewed by a tax agent.
eHealth Tip: Waiting until the last minute to handle your tax returns may lead to oversights in simple tax deductions that could earn you back thousands. According to Kiplinger, recent college grads not claimed as a dependent could qualify up to $2,500 in deductions of student loan interest paid by their parents. On the flip side, this is the first year of the ACA tax penalty—readers who buy their own health insurance should be prepared before filing their taxes.
Re-shopping for Health Insurance
It’s pertinent to make sure you’re getting the most of your health insurance and that you have all the information you need while shopping for coverage. An estimated 44 million Americans are without healthcare coverage. President Obama recently teamed up with Buzzfeed for a humorous video, including him practicing his speech to encourage people to sign up for coverage.
eHealth Tip: Even though Open Enrollment period ended on February 15, there are still ways to shop for health care plans to make sure you’re insured! It’s important to make sure you own some kind of health insurance to avoid fees and penalties, and using tools like eHealth’s Subsidy Health Center can help you learn which subsidies you are eligbile for, and what plans you still qualify for.
Saving for Retirement
Retirement may be the last thing on your mind if you are just getting footing in your career, but now couldn’t be a better time to begin putting money away for the future. A recent report by Forbes says that 60% of women are concerned that they won’t have enough money saved up for retirement, though women’s returns on their investments beat means by a little over 4%.
eHealth Tip: The Washington Post shows a startling 50% of Americans from 18-29 have zero money saved for retirement and 41% have never thought about retirement planning. Even if you’re not making millions, investing in a 401k from an early age can accumulate to hundreds of thousands, even millions of dollars in return by retirement age. For example, contributing $100 a month with an 10% return will get you a million dollars in retirement savings in 45 years.
Buying a Home
Buying your first home can be a wonderful and exciting experience. The feeling of independence and stability is something that many look forward to as they begin to build a family.
eHealth Tip: There are many costs that come with buying a home, such as attorney fees, closing costs and taxes. Planning ahead now and saving for a larger down payment will greatly decrease the interest and points you will have to pay on your monthly mortgage. It will save you thousands of dollars in the long run.
Planning for Raising a Child
As millennials begin to start families, it’s important to begin to save the money and carve out the time needed to prepare for a child. Many colleges and workplaces are beginning to incorporate programs in regards to childcare for their employees with children, and women are realizing you don’t have to choose between being a mother and being a professional—you can definitely rock at both!
eHealth Tip: The average cost of attending a public 4-year university is expected to hit 70k per year by 2030, according to Forbes. While it may be frightening to think that far ahead, the cost of raising a child is continuing to rise and it is important to start saving now so you can be prepared in the future.
Millennials aren’t really buying homes, mainly because they’re used to the convenience of renting (not paying a large mortgage, being able to move from city to city without the hassle of selling homes, etc.). With such flexibility, many forget to still look into renters insurance for their residence. If you’re wondering where you can find renter’s insurance or how to even begin shopping for it, many companies that sell car and home insurance also offer renters insurance.
eHealth Tip: Living in a rented apartment, you never know when a break-in will leave you at a loss for some of your most valued items. Be prepared for the unexpected—a small investment now of $12-30 a month can save you up to $30,000 in unexpected losses and damages.