Money for Millennials (2024)

I’m 24 years old. I have a 401k, a Roth IRA, a cash savings account, a brokerage account, and 2 credit cards. I budget every month, and stick to it, so I stay out of debt.

I am the exception. I have countless friends from my age into their 30s and beyond who were never taught about personal finances in school, who don’t know the difference between Roth and Traditional, and who don’t have a savings account or bother investing. I was the same way until about a year and a half ago, when I met my boyfriend and he taught me about how important it is to stick to a budget and save, no matter what your income.

Enough people have asked for my help that I thought I’d just write up some of my strategies and tidbits of knowledge, and hopefully they are helpful. I was also inspired by Lina’s blog post, “A Post Where I Openly Talk About Money,” on how she budgets and affords to travel as often as she does. Her post is valuable because she discusses balancing student loans with savings, and juggling side hustles with full time & freelance work. If this sounds like you, go read her post. My post is a little different, because it is targeted toward people like me, who have regular paychecks and rarely do work on the side. This strategy works just as well for me and my tech salary as it does for my boyfriend and his graduate student salary. I hope it works for you too!

Disclaimer: I am not a financial adviser or expert, just a human who thinks about this stuff a lot.

Mint is an obsession for me. I have all my accounts connected from checking to 401k. My budgets and savings goals are in Mint, as well as all my bill reminders. I even have my car linked up with their Kelley Blue Book integration so that I always have an accurate picture of my net worth. Mint is run by Intuit, the same company who makes TurboTax, so I can only hope that they are good about keeping my data secure. Best of all, it’s free!

The first thing to do is determine your income. If you are like me, your income is stable and comes in 2 paychecks a month, with taxes and 401k deductions and other pre-tax expenses (FSA, Clipper card) already removed. This makes it easy to determine net monthly income. At one job, paychecks were every two weeks rather than twice a month, so I set income to be the amount of two paychecks, and in the 2 months of the year where I earned 3 paychecks, the 3rd was treated as a bonus.

Next, pull out your recurring monthly costs into your budget. For me, that is my monthly rent, internet and utilities costs, charitable donations, and my auto & renter’s insurance. For you, it might include student loan payments, money sent home, car payments, childcare, or anything else that is a set monthly amount.

The sidebar of the budgets screen tells you how much you expect to make, how much you have budgeted, and how much is left over. Once pulling out my recurring costs, I created an ‘Everything Else’ category and allocated the remaining amount into there. Now you know how much you have to spend on incidentals each month.

I decided to take it a little further. After about three months of carefully categorizing each transaction, I took a look at my Trends screen and determined how much I spend, on average, on Groceries, Eating Out, Live Music, Cab/Taxi, and a couple other things. These are things that I know I will spend money on every month, and pulling them out into their own categories makes my Everything Else number much more useful. Mint makes it easy to pull these expenditures out into their own budget categories — select the Everything Else dropdown, and next to each category will be a + sign that creates a new budget based on your average spending in that category.

TIP: If you’re like me and use Venmo (or PayPal, or Square Cash, etc) often to share money between your partner, roommate, or friends, make sure to always cash out immediately rather than keeping a balance. This makes it much easier to categorize those expenditures as well as categorizing, say, income from when you pay for brunch and everyone sends you money. You can also link your Venmo account directly to Mint, but I haven’t tried that.

Another option Mint gives you when setting up budgets is whether or not to roll over unused amounts from one month to the next. I use this feature strategically, especially for charity donations, so I always know how much I can rage-donate if something bad happens. My boyfriend elects not to use it and just keeps the unspent cash as a buffer in his checking account. I prefer to know exactly how much I have on hand at any given time.

Step 2a: How 2 Credit

This strategy is important to me because of how I use credit. I have two credit cards: one Visa with Amazon Rewards, and one American Express with a high amount of cash back. I put almost every single purchase I make on my credit cards for a number of reasons. I get the rewards, of course, but more importantly, credit card companies will protect you from fraud in a way that the bank behind your checking account (debit card) won’t. My meticulous use of Mint has saved me a couple times when I’ve found fraudulent spending on my card — a flight on United, a thousand bucks at Best Buy — and I’ve been able to catch it in time.

Using credit cards also prevents me from having to deal with that end of the month stretch where a paycheck has run out and I’m waiting for the next one. For this to work, though, the cards need to be paid in full each month. That’s why budgeting is so important — it allows me to spend with the comfort of knowing that I will be able to cover the cost of the credit card bill when it comes around. Someone once described this strategy to me as “borrowing from oneself.”

If you don’t have a credit card, Mint can help you out by providing you with your credit score. This score is sourced from CreditKarma, which is also a great resource for choosing the credit cards that work for you, and can even pre-authorize you for some cards.

So you’ve budgeted and are spending within your means each month. Congrats! Now it’s time to think about saving. Currently I have an employer-sponsored 401(k) that is automatically deducted from my paycheck, as well as a Roth IRA and an Emergency Fund that I contribute to within my budget. I use Mint’s Goals feature to work my savings into my monthly budget and know that I can safely auto-deposit different amounts into these accounts. Here are high-level overviews of some different types of saving:

Retirement Saving

There are two main ways to save for retirement: an employer-sponsored 401(k) plan, or an IRA (Individual Retirement Account) that you set up and invest on your own. These accounts are very heavily regulated by the IRS and there are tax penalties if you withdraw before retirement age. There are also different modes of contributing to these accounts: Traditional, and Roth.

A Traditional 401(k) is an employer-sponsored plan that allows you to contribute a % of your income pre-tax to an account managed by a financial company like Vanguard or Great West. The funds are automatically deducted from your paycheck, you choose a plan (often characterized by when you expect to retire), and the bank handles the rest. This is convenient because you can assume these are already deducted when creating your budget. A Roth 401(k) is almost exactly the same, except that the funds are taxed before entering the account. Whether you choose Traditional or Roth determines how the funds will be taxed when you withdraw them upon retiring. For both types, there is an annual contribution limit of around $17,500. If your employer offers 401(k) matching, you should absolutely sign up for the plan. It’s free money. This link can tell you more about why one might choose Roth over Traditional.

An IRA is a personal retirement account that can be managed through many of the same companies, but is not handled by your employer. Similar to 401(k) plans, a Traditional IRA is contributed to pre-tax. The difference is that since your employer is not handling this, you contribute after getting your paycheck and then claim a deduction on your tax return. A Roth IRA is post-tax and therefore no deductions are allowed. Additionally, most of these accounts are managed like a brokerage account, which means you have to invest the money yourself rather than selecting a predetermined plan. The contribution limit is much lower than a 401(k) at $5500 a year, and decreases based on your income, until you are no longer qualified to contribute. In 2015 the income limit for a single person is around $130k.

To contribute to my Roth IRA, I calculated the maximum annual contribution for my income and set up a Goal in Mint for this amount plus the amount that was already there, from last year. I linked my Roth IRA account to the goal and set the monthly contribution amount to 1/12 of the contribution limit. Finally, I set up automatic deductions within my bank, which was made a little easier by the fact that both my checking account and my Roth IRA are in Charles Schwab.

An alternate strategy if your income is approaching the limit is to wait until tax season. You can contribute to the previous year’s IRA until April 15. This way, you don’t have to worry about withdrawing excess contributions. The potential downside is that you have to make sure to have the cash on hand.

Emergency Fund

Another way to save that I have found incredibly valuable is opening a high yield savings account to serve as an emergency fund. I have used this account for rent after being laid off, for security deposits on new apartments, and for expensive car maintenance. I am also considering using it as a vacation fund. Emergency funds should be kept liquid, that is, not invested in anything. This way you can easily and quickly withdraw it if the need arises.

The idea is simple: determine how many months you want to be prepared for in case something happens to your income, and save up that amount. For me, I decided that I’d like the option to be financially independent for 6 months if necessary. So I took my calculated monthly income and multiplied it by 6. Then I shopped around for a high yield savings account — one with some semblance of high interest — and set up automatic contributions monthly. I use American Express Personal Savings for my emergency fund.

To save for this, I determined how much I could afford to spare every month while still covering rent, expenses, food, and some leisure spending. Then I set up a Goal in Mint linked to my personal savings account and entered the amount I can afford to spare as the monthly contribution limit. Mint then calculated the date it estimates that I will reach the goal.

Next Level: Brokerage

For savings that are not as long term as retirement but also don’t need to be liquid immediately in case of emergency, I have a brokerage account. This is where my RSU (Restricted Stock Unit) grants from my previous employer live, but it’s also a good way to put your money to work for you. The interest rates on even the highest yield savings accounts are pretty much garbage (lower than inflation even! you’re losing money!), so once you have maxed out your emergency fund, consider opening a brokerage account with someone like Schwab, Wealthfront, Vanguard, or Betterment.

I don’t know much about investing, and I’m terrified of the stock market, but I know enough to know that index funds are a great way to invest when you don’t know much about investing. All of my Roth IRA funds are in index funds right now, as well as any spare cash that is living in my brokerage. For advice on which funds to invest in or how to diversify your investments, talk to a financial advisor (I don’t have one, but it might make sense for you!).

I have a lot left to figure out. I haven’t taken a (long) vacation since I started on this path, and as such have not come up with a solution for vacation savings. I feel a little tied down by Mint’s Goal feature, which requires a linked account and measures that account’s amount. Ultimately I think I will wait until I am done filling out my Emergency fund, and then use any surplus over the 6 month original goal as a vacation fund.

Another thing I haven’t figured out is stock options. It’s common in the tech industry to partially be compensated with stock options, but I haven’t stayed anywhere long enough to obtain any, so this is a hurdle I will have to jump over eventually.

Thanks for reading this far! I hope this guide was helpful, and if you have any questions please leave comments here on Medium. Remember, I’m not a financial adviser or tax expert, but I’m always happy to share what I’ve learned.

I was not commissioned or compensated by Mint, American Express, Schwab, or anyone else to write this post. But they are welcome to send me some cash~~~$$$