Many millennials, born in the years 1981 to 1996, entered the workforce right on the cusp of the Great Recession. The unsteady first working years, the high average student loan balances, and the disappearance of defined benefit plans (or pensions) mean millennials have been fighting an uphill battle most of their working lives.

Still, many financial advisors are impressed with millennials and how they have prioritized their finances, and for good reason. The digital native generation is also tech-savvy when it comes to figuring out the best ways to save for their futures.

But even the most dedicated saver can use expert advice on juggling competing financial priorities. We asked top financial advisors for their insight for millennials who want to get the most out of their money.

First: What Millennials Are Getting Right

Avocado toast and craft coffees aren’t making planning for their financial future hard for millennials. Millennials earn 20% less than baby boomers earned at the same age. Arguably, millennials have gotten the fuzzy end of the lollipop regarding their financial health.

Still, according to financial advisors like Douglas Boneparth, president of Bone Fide Wealth, millennials use the past to fuel their financial futures. Boneparth “thinks the trauma of the Great Recession has made millennials very aware of savings and emergency funds,” which creates a stronger foundation that allows them to be in the accumulation phase during their higher earning years.

, certified financial planner (CFP) and certified divorce financial analyst (CDFA), agrees. She says, “Millennials are responsible for their money and making great choices.” Joy is particularly encouraged by how comfortably millennials navigate retirement through company programs. Joy also finds in her practice that once millennials feel they have a handle on balancing their debt, earnings, and current savings, they seek information about the next steps. Even for millennials with no prior savings or plans for the future, all is not lost. Joy says, “If you feel like you are behind, now is such a good time to get to investing. Now, you are entering your high-earning years. There is no better time than the present to use your human capital to improve your picture.”

Emergency Savings Are Very Important

All the financial advisors interviewed in this article agreed that having emergency savings is the foundation of a sound financial plan. Life happens, and Joy emphasizes that the security of an emergency savings account can help millennials stick to their goals.

Sure, millennials could skip the emergency fund and instead invest that money. However, the average credit card interest rate for users with a balance is 22.75% as of November 2023. Even the best investment will have a hard time outpacing 22.75% interest.

Boneparth sums up the importance of emergency savings by saying, “Give yourself the opportunity to feel safe and secure before you even start investing. Starting early is important, but what good is compounding if you can’t stay invested? This way, you can navigate the ups and downs of life without having to worry. The ability to navigate that and stay on your path separates good and bad investors.”

Set Clear Priorities

Millennials who are most successful in planning their financial futures have clear priorities, say financial advisors. “You cannot have everything you want, so what is the most important thing to you? You need to list it out and really prioritize it,” says , co-founder and financial planner at AllStreet Wealth. “Also, do the opposite. Make a list of things that you can cut.”

Many people think investing and planning for the future is just about dollars and cents, but financial advisors know that many money moves are psychological. By clearly establishing priorities and knowing “what it is that you are truly after,” Boneparth says, your goals will motivate you to keep going.

Millennials struggling to figure out what is most important can talk to a financial advisor about prioritizing their goals.

Give Every Dollar a Job

Millennials earn $8 for every $10 that the boomers earned. With that in mind, , CFP, accredited wealth management advisor (AWMA), and founder and lead advisor at Hoskin Capital, recommends “giving every dollar a job.” The best way to do that is to create a realistic budget.

Budgeting is a critical part of a financial plan, and while there are as many different ways to budget as there are stars in the sky, the most important part of budgeting is seeing where your money is going. Financial advisors know this is an uncomfortable truth for many millennials and that the further we get away from tangible money, the easier it is to ignore. In fact, 65% of people do not know how much money they spent last month.

Boneparth echoes that he has seen this in his practice and encourages millennials to be honest about their budgets by budgeting “not based on what you think you are spending but what you know you are spending.”

To face budgeting woes head-on, some financial advisors, like Hoskin, recommend that millennials look at their spending for the three months before they lay out a budget for future expenditures. Hoskin recommends smartphone apps as a quick way to see income vs. expenses for the three prior months without having to backtrack every expense with pencil and paper.

Focus on Reverse Budgeting

Budgeting will reveal either a surplus or a deficit for millennials. Once millennials know where their money is going, “even if their money is not spreading as far as they want it to,” they can focus on reverse budgeting, says Hoskin. Reverse budgeting means putting money aside for your future self first.

Kopelman agrees wholeheartedly with Hoskin on reverse budgeting. Hoskin further recommends that millennials take advantage of automated investing and savings. He sees automation as tricking your brain and nervous system into sticking to the strategies. Setting money aside for your future self first by automatic withdrawals or transfers means you are working toward your goals before any of your income is spent.

Budgeting is not a set-it-and-forget-it endeavor. Millennials should continue to track their budget and adjust goals as their priorities and income change. An easy place to continually track your budget is with a calculator.

“The best we can do is our best,” says , CFP, founder of Advize Wealth Management. “We cannot predict the future, so we will put together a plan, stick to it, and adjust accordingly.”

Be a Goal-Getter with ‘Free Money’

Another way millennials can slay their financial futures is to make sure that they take advantage of all the “free money” offered by their employers.

We know that an overwhelming percentage of millennials are participating in employer-sponsored retirement plans, and they should pat themselves on the back for that. Participating is the first step; taking advantage of employer matching is the next logical step. Hoskin says this should be the watermark for millennials with few extra means. Leaving matching contributions on the table is like walking away from free money.

Create a Financial Plan

Once millennials have established emergency savings and taken advantage of all matching employer contributions, financial advisors recommend working toward tackling those financial goals and priorities based on their budgets.

There are some universally accepted future-focused budgeting tactics, like the 50/30/20 budget rule, where 50% of income is spent on needs, 30% on wants, and 20% on savings. While the 50/30/20 rule is simple, financial advisors tend to agree that saving 20% of income is a solid target, but 15% is a great starting point.

Those incapable of saving 20% of their income today should ideally save no less than 10% and incrementally increase it. Joy calls this “matching your lifestyle creep with your savings creep.” Managing the lifestyle creep is where a financial advisor can come in handy as well, because they can help millennials continually reassess the percentage of gross income they’re investing.

Financial advisors want their clients to invest based on their priorities, but they also emphasize the importance of Roth individual retirement accounts (Roth IRAs) for those who qualify. Roth IRAs are accounts in which millennials can invest after-tax dollars. That is beneficial because millennials who wait to withdraw this money until after they are 59½ years old can withdraw this money and its growth tax-free.

Additional Considerations

The most popular source for millennials to get financial advice is social media. Many advisors today exist in the social media space and practice radical generosity with their knowledge and expertise.

However, as with anything, only some on the internet are experts. Millennials should approach some free financial literacy with the same caution that they might approach an unusual, spam-like social media direct message.

Millennials investing in company-sponsored plans need to talk with their plan provider to ensure that their money works for them by being invested appropriately for their target retirement date and risk tolerance. Plan providers can discuss this with millennials, but millennials can also address this with financial advisors as part of their overall picture.

Joy also encourages millennials to talk with someone if they have stock options as part of their overall compensation. She has seen ill-prepared millennials make very reactive decisions regarding their stock options. She says planning can make these stock options more integrated into millennials’ financial plans.

The Bottom Line

Millennials are DIY-ing their financial future more than any generation before them, but financial advisors agree they’re doing an OK job. Still, millennials who desire the best outcomes should prioritize goals and budgeting, take advantage of “free money” from their employer, make a savings plan, and stick to it. Financial advisor Melissa Joy reminds us that perception is not always reality because “you always think everyone is doing better than you are, and that is not always the case.” However, millennials worried about how they stack up should not quit before they begin. It’s not too late to plan for your financial future. Douglas Boneparth reiterates, “The first best time is yesterday. The second best time is today.”