It Isn’t Too Late For Millennials To Build Wealth. What To Do If You’re Starting Now
July 11, 2021
August 15, 2021
Now that the world economy has been crippled by the Covid pandemic, talk has turned to what a full recovery will look like.
Will it quickly spike back up once the economy fully reopens? Or will it be more gradual?
If you’ve taken a financial hit from the downturn, you’re probably wondering how soon you can bounce back.
That’s likely due to forces outside of your control – a job loss, salary cuts or unforeseen expenses.
“Recession can mean a lot of things for a lot of people,” said Winnie Sun, co-founder and managing director of Sun Group Wealth Partners in Irvine, California.
But the good news is there are steps you can take to manage your financial health.
If you’re feeling panicked about money, the first thing you want to do is get organized.
This is what Sun calls, “Stop, drop and reassess.”
Gather your financial statements, including for your retirement investments and savings and checking accounts.
“Go through the process of figuring out your budget, how much of your money you have going out and where is your money going,” Sun said.
The key thing is to be slow and steady. Think about ways you can consistently save.Winnie SunFOUNDER OF SUN GROUP WEALTH PARTNERS
Tally up your absolute necessities and figure out how much those cost. This includes your rent or mortgage, utilities, groceries and medications.
Anything that doesn’t fall in those core needs categories are not must-haves. That shows where you may be able to cut back when money is tight.
If you have debts you can’t pay – such as credit cards or student loans – don’t be afraid to let your lenders know.
“Overcommunicate with people that you might owe money to and see where you can find some relief,” Sun said.
You may be surprised by the results, Sun said. With so many people also going through the same thing, you may be more likely to get some flexibility by postponing your payments or refinancing.
To estimate how much you will need, tally up how much you spend over the course of a month. Do that for four months and then take the average. Then, multiply that times six, Sun suggests.
If you have children, be sure to add extra for them. Sun recommends an extra three months’ savings per child.
If you still have income coming in, don’t forget to put aside money for your future retirement needs.
“I wouldn’t overdo it right now. I think the key thing is to be slow and steady,” Sun said. “Think about ways you can consistently save.”
One way to do that is to increase your 401(k) contributions. Even small increases can add up big over time.
In addition, you may want to consider investing your post-tax money in a Roth individual retirement account. That way, you can withdraw your contributions if an emergency crops up without having to pay taxes or penalties, Sun said.
But beware: If you withdraw the earnings on your investments, you will face penalties.
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July 11, 2021
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