I’ve been a financial planner for well over a decade now, and I’ve worked with all sorts of clients, at many different stages in their life. Some have been looking to retire, others have been living in retirement communities for awhile, and others are just getting started on their financial life. 

One of the things that has stuck out to me, though, is how financial planning for millennials and the younger generation is so incredibly different than it is and was for the older generations. 

Let’s talk about what those differences are, what a financial planner should be doing to meet your needs as a younger person starting their financial journey, and how you can best prepare your financial future starting now. 

The differences between millennial & Gen X planning

As a financial planner, the way that I approach someone who is of or nearing retirement age is vastly different from the way I approach someone who isn’t. For the most part, the older generation has been saving. 

They aren’t coming to me to ask about how they should be saving their money. They’re coming to me to ask how they can make the transition from an employee to a retiree in a way that ensures their money is sustained for the rest of their life. 

We’ll look at how these people have invested, what their spending habits are, and how they want to live throughout their retirement. As with any financial situation, there are going to be many dependent variables, but the one clear theme among the older generation is that the building blocks are already there. 

Now, to contrast that with millennials and younger clients, those variables often are NOT in place. 

For example, I was recently working on a young client’s financial plan. In looking at their projections, my data was telling me that this person should have $20-$30 million dollars by the time they retired. However, I knew that was flat-out wrong. 

I can PROMISE you that if that client had that amount of money, they would be changing their lifestyle and spending habits dramatically. 

What variables should millennials consider when planning for their financial future?

Now that we understand the dramatic differences in spending habits for people of different age groups, let’s talk about the variables a good financial planner should be looking at in order to accurately help you. 

The spending habits of a twenty-five-year-old are going to be very different than those of a thirty-five-year-old, even if they’re the same person in a different season of life. As a financial planner, it’s my responsibility to recognize these changes and plan for them! 

Financial planners want to give you certainty so that you can have an accurate forecast for the future. I promise that’s really what we want! The problem is that life doesn’t always (or hardly ever) go to plan, and we can’t always predict a future we don’t know. 

For example, I recently had some very good friends who bought a house. Two years later, they picked up and moved to an entirely different city. NO ONE could have predicted that, but it greatly affected their finances and how they were planning for the future. 

Here are some starting points, though, if you’d like to plan ahead to the best of your ability: 

  • How much money are you going to be spending? 
  • What are you going to be doing with your career? 

Making the “next best” decision

The truth is that younger clients shouldn’t be planning for decades in the future. Now, I’m not saying to go crazy with your money! But instead of constantly thinking so far ahead, I encourage my younger clients to look at the next best decision. 

This is going to look like: 

  • Saving for retirement
  • Paying off student loans
  • Buying a house
  • Starting a family 

There are very few retirees who are planning for the above life events. So instead of considering what your life is going to look like in 20 years, you (or your financial planner) should be considering what your life is going to look like within the next few years. 

Most people will change their lifestyle and spending habits as their income grows. Yes, you might be living on a beans and rice budget now, but when you have $1 million saved, will you still be eating those things? Hopefully not! 

What this all comes back to is: how do you make the next best decision, today, for your finances? 

There will be surprises along the way — good and bad. And when working with millennials, financial planning is really about trying to prepare for as many surprises as possible as well as setting themselves up for the future. 

Financial planning is not about trying to create certainty. Instead, it’s about navigating the financial uncertainty to make the next best financial decision for yourself. 

Thanks for tuning in!

Thank you so much for checking out this episode of Everyday Money with Hannah Moore. I look forward to talking more with you about how you can prepare your financial picture for any number of events/purchases.

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