As 2022 ends, it’s the perfect time to readjust your money goals and plan for your future success. So we asked experts what each generation should focus on as we head into the New Year. Their financial tips do not disappoint.
If you’re unsure where to start with your money or want to ensure that you’re on the right track, here are some reminders and recommendations from industry professionals. However, before we launch into the tips, here’s a cheat sheet on the generations, standard designations and age ranges.
- Baby Boomer Generation: born between 1946 and 1965
- Generation X: born between 1966 and 1980
- Generation Y (millennials): born between 1981 and 1996
- Generation Z: born between 1997 and 2012
Secure Your Own Financial Future
“Baby Boomers are now mostly retired or in the golden years of their working lives,” says Chrissy of Eat, Sleep, Breathe FI. “They’ve worked hard and are finally ready to enjoy the fruits of their labour.” Of all her financial tips, she says the best thing to do at this point is to ensure you have a solid financial plan for retirement. From there, review your plan annually to ensure you’re still on track. “Regular check-ins and the willingness to be flexible will go a long way in ensuring that your portfolio will last you the rest of your life,” says Chrissy.
Review Your Retirement Portfolio With Family
Make sure your retirement savings are appropriately allocated and balanced. Liz Enrique, a personal finance educator, says to review your retirement plan and discuss it with your family. “If you have kids, let them know your plans for retirement and aging.” She also encourages those who need financial support from their family to talk about it, so they are not caught off guard.
Be Prepared For Your Future
As retirement rapidly approaches, now is the time to focus on your future. Budgeting expert, Jessica of Canadian Budget, says you should be getting clear on where you are with your finances today. “Spend some time focusing on your finances,” she says. “Take a full snapshot of where you are today: list everything you owe and own, making yourself a net worth chart.” From there, it’s always important to speak about your plans for the future, what your ideal retirement looks like to you, and how you see yourself funding it. If you have a partner, Jessica says it’s key you get on the same page and make a clear plan to help you identify what your goals are and make a plan to move toward them.
Know Your Risk Tolerance
At this age, you must understand your risk tolerance and adjust your investment mix accordingly. Bob Tawcan, a financial blogger, says stocks have a yearly historical long-term return of 10%. “Do not shift too much of your retirement investment into bonds, especially considering the raising interest rate environment (bonds have an inverse relationship to interest rate).”
Focus on Your Goals — Not What Society Tells You
Being a millennial often means feeling a lot of pressure. Nicole Victoria, CEO + Money Coach says to stop spending money, you don’t have to impress people you don’t like and start prioritizing your financial health and true happiness. “You may think owning more things will make you happier, but the reality is that happiness plateaus,” says Victoria. “Think of yourself at a buffet — the first plate is awesome, the second plate is good, and you’re regretting your choices by the third plate.” She says this is the same as spending money.
“When we buy our first home, or first car, or take our first trip, it feels amazing, but as consumerism takes over and we start spending more than we make, allowing debt to fill the difference, it brings us less happiness and more stress,” says Victoria. “Learn what your values are, practice self-love, and spend in alignment with your goals.”
Invest in the Stock Market
If you’re still not investing your money, Asher Rogovy of Magnifina says it’s never too soon to get your start. “Young investors may feel apprehensive because they are waiting for a good deal when markets fall,” says Rogovy. “The truth is, it’s impossible to time the market perfectly.”
Instead, invest a set amount every month regardless of whether the markets are up or down. Rogovy’s financial tip is to stay disciplined. “Young investors have the benefit of time, and the stock market usually makes new highs within years of a previous top.”
Understand and Take Advantage of Your Employee Benefits
As you enter the workforce, take advantage of potential benefits to gain the most value possible. Lauren Bringle of Self Financial says that your paycheck isn’t the only financial benefit your company provides. Instead, there are job perks that offer the most benefit. As you understand and use those benefits, they’ll potentially “save you or make you thousands of dollars over time.”
How can you make the most of those benefits if your employer offers RRSP or other retirement options? First, Bringle asks, “Do they provide a matching contribution?” Then, she says, “If so, contribute at least enough to get the full match.” Otherwise, you’re “missing out on a big chunk of retirement savings.” That’s especially critical if you’re a member of the younger generations. Why? Compound interest, the money you earn on your investments, can add up over time.
Start Investing While You’re Young
Stacy Caprio of Fiscal Nerd says that you should prioritize investing at a young age to reap the benefits when you’re older. “The earlier you put small amounts of money into investment vehicles, the more time it has to compound and start snowballing into huge amounts in a few decades.” The later you invest, the less time your money has to grow. Caprio encourages Generation Z to start early.
Regardless of age, these financial tips offer valuable insights for your future. Our experts agree that it’s time to prepare for retirement and your financial future. But, of course, being over-prepared isn’t bad, as this year has already proved. Instead, it is a great relief.
