Next Level Money: 6 Steps for Millennials to Master Personal Finance
May 31, 2024
In a world where financial advice is often aimed at either the extremely wealthy or those struggling to make ends meet, millennials find themselves on a unique middle ground. We have been through the highs of economic growth and the lows of global recessions.
The Great Recession caused a massive economic retraction just as our generation was coming of age and ready to rock the working world. Suddenly, older generations extended their working years and crowded millennials out of the job market. And while job offers became rare, student loan repayments came due.
Millennials have often been labeled as the generation of renters, travelers, and gig workers, typically prioritizing experiences over possessions. But as you mature, your financial goals evolve. Now is a time to look at building sustainable wealth, securing your future, and balancing the costs of raising a family with your own personal and professional aspirations.
Now, as you step into your 30s and 40s, understanding personal finance for millennials is crucial to achieving your goals. Embrace strategies that cater to the unique challenges and opportunities related to millennials and money today.
Millennials and Money: 6 Steps to Master Personal Finance
Below are six essential steps in millennial finance for those ready to kickstart their journey toward advanced financial mastery.
Step 1: Master Financial Basics
The first step towards taking your finances to the next level is solidifying your financial foundation. This involves:
- Budgeting wisely: Use apps or traditional spreadsheets to track your expenses to understand where your money goes each month and identify areas for cost-saving. Millennials are known for wanting their investments to align with their values. Consider prioritizing what matters most to you as a first step in budgeting. This could mean allocating funds for charitable donations or investing in energy-efficient solutions.
- Building an emergency fund: Aim for three to six months' worth of living expenses, stashed away in a high-yield savings account for unforeseen circumstances. You’ll be surprised at how much an emergency fund can lighten the mental load of day-to-day living.
- Tackling debt: Prioritize high-interest debts such as credit cards first, then student loans, and other personal loans. You can also use strategies such as consolidating debt under a lower interest rate or even calling your creditors to negotiate lower rates after consistently making on-time payments.
Step 2: Invest in Your Future
Once your foundations are strong, start looking towards the future with investing.
- Retirement savings: If you haven’t already, start contributing to a retirement account, be it a 401(k), an IRA, or any other available option. Always take advantage of any employer match, as they essentially provide free money towards your retirement.
Consider putting a strategy in place to boost your savings as you advance in your career. Every time you receive a pay raise, commit to increasing your contributions. You won’t give yourself time to get used to having more money if you send it directly to savings. - Stock market: Investing in the stock market can be a great way to grow your wealth over time. Consider low-cost index funds or ETFs as a start, and remember, it’s about time in the market, not timing the market. You can review your investments annually to rebalance and maintain diversity in your portfolio.
- Real estate: For those interested in tangible assets, real estate can provide both rental income and value appreciation. However, it requires significant capital and management unless you opt for real estate investment trusts (REITs).
Step 3: Advance Your Career
Increasing your primary income source is another crucial step. This might involve:
- Continuing education: Certifications, workshops, or advanced degrees can boost your employability and potential income. Let your boss know you want to grow, and then seek specific courses. You’ll be most successful in getting your employers to pay for a program if you can articulate what benefits they receive from investing in you.
- Networking: Build relationships within your industry. Networking can open doors to job opportunities and collaborations you might not find otherwise. Even if you aren’t looking to change jobs, networking can be a key to helping you grow where you secure raises and promotions. When you talk to other professionals in your industry, they will undoubtedly share experiences that allow you to grow in your own job.
- Negotiating salaries: Don’t shy away from negotiating your salary. Know your worth and the market rates for your job function and geography. The best time to negotiate a salary is when you are first hired, but you should bring it up at each annual review. Come prepared with a list of all the ways you have helped your company’s mission and bottom line over the last year.
Step 4: Maximize Your Tax Advantages
Maximizing your tax savings involves several strategies you can use to reduce your taxable income and increase your tax benefits. Here are some common ways to achieve this:
- Maximize retirement contributions: Contributing to retirement accounts like a 401(k) or an IRA can reduce your taxable income. These contributions are typically made pre-tax, which can lower your tax bill.
- Use Health Savings Accounts (HSAs): If you have a high-deductible health plan, you can contribute to an HSA, which offers tax-free contributions, growth, and withdrawals for qualified medical expenses.
- Claim education credits: If you're paying for education, you might qualify for education credits like the American Opportunity Credit or the Lifetime Learning Credit, which can directly reduce your tax bill.
- Check for eligibility for credits and deductions: Many tax credits and deductions are available depending on your situation, like the Earned Income Tax Credit, Child Tax Credit, and deductions for energy-efficient home improvements.
- Consider charitable contributions: Donating to charity can not only be personally rewarding but also offer tax deductions. If you donate appreciated stocks or assets, you might avoid capital gains tax in addition to receiving a deduction.
Step 5: Diversify Your Income
Relying on a single source of income can be risky. Diversifying your income streams can provide financial security and extra funds to reinvest.
- Side hustles: Whether you freelance, consult, or start a small business, find something you're passionate about that can generate additional income. Tailor it to your financial goals and your time and energy constraints.
- Passive income: Investments in dividend-paying stocks, bonds, or rental properties can generate regular, passive income. Online platforms also offer ways to create and sell digital products or courses, requiring an initial time investment with the potential for long-term gains.
Step 6: Protect Your Wealth
As your assets grow, protecting them becomes more important.
- Insurance: Ensure adequate coverage, from health to home and life insurance. As your financial situation evolves, so should your coverage.
- Estate planning: It might seem premature, but setting up a will, a living trust, and healthcare directives can ensure your assets are handled according to your wishes, should anything unexpected happen.
Partner with Five Pine Wealth Management’s Expert Advisors
The financial world is constantly evolving, it’s important to stay informed about emerging financial trends, new investment opportunities, and economic shifts, and adapt your strategies accordingly.
While the DIY approach is popular, consulting with a financial advisor can provide personalized advice tailored to your specific circumstances. A good advisor can help you navigate complex financial landscapes, make informed investment choices, and plan for future needs, such as children’s education or retirement.
The team at Five Pine Wealth Management is ready to help. To set up a complimentary consultation with a team of experienced financial advisors who will work with you to take your personal finances to the next level, send us an email at
info@fivepinewealth.com or give us a call at 877.333.1015.
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We’re all feeling it these days: the underlying feeling of uncertainty about what lies ahead. Each day, we see headlines about inflation, Social Security’s future, or market swings. Unsurprisingly, Gallup tells us that the top three American fears have to do with money: the economy, availability/affordability of healthcare, and inflation. If you’re in your 50s and 60s, these concerns probably hit even closer to home. You’re not just thinking about the economy in general terms. You’re wondering how it will affect your specific retirement plans. Your mind likely turns to: Increasing healthcare costs – can you absorb unexpected costs on a fixed income? Inflation and market volatility – will the value of the dollar diminish your retirement savings? Social Security uncertainty – will it exist when you retire? Having enough saved – will your retirement budget hold up when the time comes? About 1 in 4 Americans over 50 are delaying retirement , and it’s not hard to understand why. With thoughtful planning and the right strategies, you can build confidence in your ability to maintain your lifestyle on a fixed income, regardless of what economic curveballs come your way. 5 Key Strategies to Prepare for Living on a Fixed Income Uncertainty doesn’t have to derail your retirement plans. By addressing these five critical areas, you can build a foundation that allows you to enjoy the retirement you’ve worked toward. 1. Review (And Potentially Adjust) Your Retirement Timeline One of the most powerful tools you have is flexibility with your retirement timeline. While certain ages qualify you for benefits or withdrawals from certain accounts, there’s no concrete age you have to retire at. Traditional retirement at 62 or 65 might not make sense for your unique situation; you should feel free to alter your timeline to make sense for you and your family. Consider Your Social Security Strategy Your Social Security benefits increase each year you delay claiming them beyond your full retirement age, up until age 70. For many people, this creates a meaningful boost to their guaranteed monthly income. If you can afford to wait, this strategy alone can significantly strengthen your fixed-income foundation. Explore Phased Retirement Options Rather than going from full-time work to complete retirement overnight, consider a gradual or phased transition. Many of our clients find success with: Part-time consulting in their field of expertise Freelance work that leverages their skills Small business ventures they've always wanted to try Investment properties that generate passive income This approach not only eases the financial transition but often provides a sense of purpose and engagement during early retirement. 2. Fine-Tune Your Investment Mix and Retirement Income Strategy Adjusting your portfolio is an ongoing responsibility, not a one-time task before retirement. Continue to revisit and rebalance as a proactive part of your retirement plan. Equally important is creating multiple income streams to reduce your reliance on any single source. Diversify Your Retirement Income Sources Think of building several income bridges instead of relying on one massive one. Your retirement income might come from Social Security, traditional retirement accounts (401(k), IRA), Roth accounts for tax-free withdrawals, and taxable investment accounts for flexibility. Each serves a different purpose in your overall strategy. Is Your Portfolio Inflation-Resistant? Cash can feel safe, but inflation quietly erodes its purchasing power over time. If you want an honest look at the hard numbers of inflation, see the Bureau of Labor Statistics CPI Inflation Calculator . For example, we see that $1,000,000 in 2015 has the buying power of $1,380,194 in 2025. You would need an extra (almost) $380,000 to make up for inflation. Inflation is a reality of the economy that everyone deals with, but your investment strategies can mitigate its impact on your net worth. Consider allocating a portion of your portfolio to assets that historically perform well during inflationary periods. Don’t Abandon Growth Too Soon If you're retiring in your early 60s, you could have 20-30 years ahead of you. Being overly conservative with your investments might feel safer in the short term, but it could leave you struggling to maintain your lifestyle later. A balanced approach that includes growth-oriented investments can help ensure your money lasts as long as you do. 3. Reduce Outstanding Debts The Federal Reserve’s most recent Survey of Consumer Finances reports that the average older adult (ages 65 and up) carries between $95,000 and $172,000 in debt. The bulk of those debts is from outstanding mortgage balances, but credit card and medical debts contribute significantly. Prioritize Your Debt Payoff Strategy High-interest debts from credit cards and personal loans can take up a lot of room on a fixed income. Consider whether it makes sense to use some of your current higher income to aggressively pay down these balances before you retire. There are two primary ways of tackling multiple debts: Avalanche: Pay off your balances starting with the highest interest rates. Snowball: Pay off your balances from smallest to largest. Entering retirement debt-free can be a very freeing experience. Consider Your Mortgage Your mortgage situation is more nuanced. Some retirees find comfort in owning their home outright, while others benefit from maintaining their mortgage if it's at a low interest rate, and money can be invested for higher returns. The right choice depends on your specific situation and comfort level. 4. Plan for Healthcare Costs and Insurance Transitions Healthcare expenses are frequently retirees' most underestimated cost. Add in Medicare's maze of coverage options, and it's no wonder many retirees feel unprepared. Planning for these expenses and understanding your options before you need them can prevent costly surprises that strain your fixed income. Understand Your Medicare Options If you're 65 or older: Enroll in Medicare during your Initial Enrollment Period (IEP), which begins 3 months before your 65th birthday and extends 3 months after Consider supplemental coverage options: Medigap (if you choose Original Medicare Parts A and B) Medicare Advantage (Part C) as an alternative to Original Medicare Prescription Drug Coverage (Part D), if not included in your plan If you’re under 65 and retiring, consider: COBRA coverage from your employer allows you to keep your current plan for up to 18 months, but you'll pay the full premium plus administrative fees (typically $400-$700 per person monthly) Your spouse's employer plan (if available and you're eligible) An Affordable Care Act (ACA) marketplace plan Prepare for the end of employer-sponsored insurance coverage about a year in advance to avoid lapses in coverage. Build a Healthcare Reserve According to the 2025 Fidelity Retiree Health Care Cost Estimate , a 65-year-old individual may require approximately $172,500 in after-tax savings to cover health care expenses in retirement. Consider establishing a separate savings account specifically for medical expenses. Health Savings Accounts (HSAs), if you're eligible, offer triple tax advantages and can be particularly valuable for retirement healthcare planning. 5. Create a Flexible Retirement Budget It’s wise to reevaluate where your money is going every month so you can enjoy once-in-a-lifetime retirement opportunities fully. This, combined with an emergency fund, helps avoid lifestyle creep and the stress of unexpected expenses. Plan for the “Retirement Smile” Retirement spending tends to move in a “U” shape: higher spending in early retirement, less in the middle, and back up again towards the end. While your bucket list trips and experiences are significant expenses, they’re often one-and-done. Most people do these things early on in retirement and slow down into a more predictable financial rhythm. Towards the end of retirement, costs often increase again to cover long-term care needs. Organize Your Budget Into Categories Consider dividing your retirement expenses into essential costs (housing, utilities, healthcare), lifestyle expenses (travel, dining, hobbies), and discretionary spending (gifts, major purchases). Cover your essentials with your most reliable income sources like Social Security, while funding lifestyle expenses through portfolio withdrawals that can adjust during market downturns. How Can You Reduce Your Future Cost-of-Living? Consider ways you can capitalize on your existing assets to better position yourself for the future. If you’ve built significant home equity, downsizing or moving to a more affordable city may be a great option, as you’ll benefit from liquidity and reduced costs. Rely on A Trusted Fiduciary Financial Planner If you’re feeling anxious about the future, know this: you’re not stuck doing it on your own. With the help of a fiduciary financial planner, you can not only see if your plan holds up against inflation and economic uncertainties, but they will: Prioritize tax-efficient retirement withdrawal strategies Strategize Required Minimum Distributions (RMDs) Create a sustainable withdrawal strategy The best thing you can do for a healthy retirement is to leverage the experts. At Five Pine Wealth Management , we create comprehensive financial plans that align with your financial goals and personal values. If you'd like to discuss how these strategies might apply to your specific situation, we're here to help. Email us at info@fivepinewealth.com or call 877.333.1015 to schedule a conversation about your retirement planning needs.
Your 40s arrive with a unique mix of clarity and urgency. You've likely figured out what you want from life, but suddenly retirement no longer feels like a distant concept. If you're looking at your financial situation and feeling behind, you're not alone. Many people in their 40s experience this same wake-up call. The good news is that this decade offers some of the most powerful opportunities to accelerate your wealth-building journey. Think of your 40s as your financial prime time. You're earning more than you ever have, you understand money better than in your 20s and 30s, and you still have 20-25 years to let compound growth work its magic. Instead of dwelling on what you should have done differently, let's focus on what you can do right now to make this decade count. The Reality Check: Where You Stand vs. Where You Want to Be Before exploring strategies, let's acknowledge the elephant in the room. Many financial experts recommend saving three times your annual salary by age 40. If you're reading this and thinking, "I'm nowhere near that," take a deep breath. Life happens. Maybe you started your career later, switched fields, dealt with medical expenses, helped family members, or simply prioritized other goals during your 30s. The key is to start from where you are today, not where you think you should be. Your 40s bring unique advantages: higher earning potential, greater financial discipline, and often more stable life circumstances. Many successful investors didn't hit their stride until their 40s or later. You're not behind; you're just getting started on a more intentional path. Retirement Savings Strategies That Work in Your 40s Your retirement savings strategy in your 40s should differ from someone in their 20s or 30s. You have less time but more resources, which means you need to be both aggressive and smart about your approach. First, maximize your employer's 401(k) match if you haven't already. This is free money, and missing out on it is like leaving cash on the table. Additionally, consider increasing your contribution rate by 1-2% each year, or whenever you receive a raise. This gradual approach makes the adjustment less painful while significantly boosting your long-term savings. Roth conversions become particularly powerful in your 40s. If you expect to be in a higher tax bracket in retirement or if you want to leave tax-free money to heirs, converting some traditional IRA or 401(k) funds to Roth accounts can be a smart move. The key is to do this strategically, perhaps in years when your income is temporarily lower or when you can manage the tax impact. Don't overlook the power of diversification beyond your 401(k). A taxable investment account gives you flexibility and access to your money before age 59½ without penalties. This can be crucial for achieving early retirement goals or covering major expenses that may arise before the traditional retirement age. Catch-Up Retirement Contributions: Start the Habit Now Once you reach 50, you can make catch-up contributions to your retirement accounts, which significantly increases your savings potential. For 2025, this means an additional $7,500 in 401(k) contributions (bringing your total to $31,000). However, you don't have to wait until 50 to think like someone making catch-up contributions. Start now by treating your savings rate as if you're already eligible for these higher limits. If you can save an extra $600 per month ($7,200 annually) starting at 45, you'll have built the habit by the time you're actually eligible for catch-up contributions. Retirement Milestones by Age 40: A New Perspective Traditional retirement milestones can be discouraging if you're starting later or if life hasn’t gone as planned. Instead of focusing on arbitrary multiples of your salary, consider these more practical benchmarks for your 40s: The Emergency Fund Foundation : Before aggressively pursuing retirement savings, ensure you have a solid emergency fund in place. This prevents you from having to tap retirement accounts during tough times. Aim for 3-6 months of expenses, adjusted for your specific situation. The Debt Freedom Focus : High-interest debt can quickly derail retirement plans. If you're carrying credit card debt or other high-interest obligations, addressing these might be more valuable than maximizing retirement contributions beyond your employer match. The Income Replacement Goal : Rather than focusing on net worth multiples, think about what percentage of your current income you're on track to replace in retirement. A good target is 70-80% of your pre-retirement income, but this depends on your lifestyle and retirement plans. The Flexibility Buffer : Your 40s are a great time to build financial flexibility. This means having investments outside of retirement accounts that you can access without penalties, creating multiple income streams, and maintaining career skills that keep you marketable. Insurance: Life and disability insurance coverage should reflect your current income and family needs. Estate Planning : A basic will, power of attorney, and healthcare directive should be in place. Making Your Peak Earning Years Count Your 40s often represent your peak earning years, and how you manage this increased income will significantly impact your financial future. The temptation to inflate your lifestyle with every raise is real, but this decade calls for more strategic thinking. Consider implementing a "pay yourself first" approach where you immediately redirect any income increases to savings and investments. If you get a $5,000 raise, automatically increase your 401(k) contribution by $3,000 and your taxable investment account by $2,000. You'll barely notice the difference in your take-home pay, but you will thank yourself in the future. This is also the time to think seriously about additional income streams. Whether it's consulting in your field, starting a side business, or investing in rental real estate, diversifying your income sources provides security and potential for acceleration. Building Wealth Beyond Retirement Accounts While retirement accounts are crucial, they shouldn't be your only wealth-building tool. Your 40s are an excellent time to diversify your investment approach and build wealth that's accessible before traditional retirement age. Consider opening a taxable investment account if you haven't already done so. This provides flexibility and liquidity while still offering growth potential. Focus on tax-efficient investments, such as index funds, and consider holding dividend-paying stocks or REITs for their income potential. Real estate can be particularly powerful in your 40s. Whether it's paying off your primary residence early, investing in rental properties, or exploring REITs, real estate adds diversification and potential inflation protection to your portfolio. Don’t Forget the “You” Factor We’d be remiss not to mention this: life in your 40s is busy. You might be managing aging parents, teenagers, or a toddler (or all three). You may be helping your partner through a career change or navigating one yourself. It’s a lot. Which is precisely why intentional financial planning matters now more than ever. You don’t need to do it perfectly. You just need a plan that’s rooted in your real life — your values, your vision, and your goals. A good financial advisor can help you prioritize, simplify, and clarify the next best steps, even if you feel like you’ve fallen behind. Ready to Create Your Personal Financial Strategy? Feeling overwhelmed by all the options and strategies available? You don't have to navigate this journey alone. At Five Pine Wealth Management , we specialize in helping individuals and families in their 40s and beyond create comprehensive financial plans that align with their goals and circumstances. Whether you're looking to maximize your retirement savings, explore catch-up strategies, or build a diversified investment portfolio, our team can help you develop a personalized approach tailored to your situation. We work with clients at various stages of their financial journey, from those just getting serious about retirement planning to those with substantial assets seeking to optimize their strategies. Don't let another year pass wondering if you're on the right track. Schedule a conversation with our team to discuss your financial goals and explore how we can help you make the most of your financial prime time.
