For most, October marks the beginning of autumn, Halloween celebrating, and preparation for the holiday season. However, what some might not realize is that October is also home to Financial Planning Month. For people either just starting out their careers or those who are about to enter into retirement, financial planning and budgeting can be a difficult, confusing area. In honor of Financial Planning Month, we decided to outline facts to provide some insight and tips on budgeting, investing, and retirement.
1. In 2015, millennials represented more than one in three American workers. Despite common belief that millennials are irresponsible with finances, a study shows that millennials save on average 8% of their salary for retirement which is not dissimilar from the 9% baby boomers save on average. Additionally, 74% of millennials surveyed said they are comfortable saving and investing extra money rather than spending it.
2. Genetic factors could make up to 35% of the variation in investment behavior, according to a recent study. This defines our likelihood of making emotional errors in investing and whether or not we realize our losses. However, aside from genetic factors, socio-economic influences and individual choice play a large role in our investing behavior.
3. A good way to get better at planning your budget is to practice the 50/30/20 model of budgeting – 50% of household income goes to needs, 30% to wants, and 20% to debt repayment and savings. With many people living on limited incomes and paying high rent prices, this model can help you prioritize what money you need to spend and what money can be saved.
4. The frugal, penny-pinching mindset that many take on in order to save for a fulfilling, relaxing retirement often carries over into one’s actual retirement. Meir Statman discusses mistakes made in retirement spending and how conscientiousness can keep people from spending the money they’ve saved. Statman suggests structuring retirement spending with “managed payout” funds.
Read more of the facts and tips at https://blog.oup.com/2017/10/tips-facts-financial-planning/