Financial Planning for the MTV Generation

Financial Planning for the MTV Generation
by: ARA Content


(ARA) - So, you were born between 1965 and 1978. Are you tired of the
Generation X label and being portrayed by the media as a cynical, Xtreme
sports-loving, body-piercing slacker? If you're one of the 76 million
Americans that are considered to be "Xers," you may see yourself more as
an independent, career-minded, technologically savvy, young adult. As
someone between the age of 22 and 35, "Xers" most likely tune out the
thousands of marketers with retirement messages geared towards "boomers."
Insurance providers, investment companies and financial planners are
virtually ignoring the millions of Americans considered to be "Xers."
Meanwhile this misunderstood group continues to buy homes and select
mortgage companies and retirement plans with little attention and
relevant advice.

So, are boomers the only generation that should be concerned about their
future? Absolutely not. Planning for your future can be tough for anyone,
no matter what his or her age. But individuals between the ages of 22 and
35 need to recognize the important opportunity they have of starting
early and understanding the basics, according to Randy Schuldt, vice
president with IHateFinancialPlanning.com, a new Web site geared to the
more than 75 percent of Americans who hate financial planning.

Schuldt offers some additional financial planning tips for Generation
Xers:

Think Retirement

According to the 1990 U.S. census, the average American worker has only
saved $1000 towards retirement. Pretty sad, isn't it? To make matters
worse, the average monthly Social Security benefit for a retired worker
in 2000 was $804 (Source: U.S. Social Security Administration). You've
heard it before, the sooner you start saving for your future, the better.
So where do you start? First of all, just start. Consider putting away a
little at a time -- $25 or $50 a month - in a mutual fund or 401(K)
account. If you're 25 years old and put $25 away each month into an
account earning 8.0 percent, you will have saved $58,099 by retirement at
age 60. Compare this amount to the $14,940 you would save by starting
when you're 40.

Develop a Financial Plan

Whether you're graduating from college, getting married or having a baby,
you need to set specific goals (home ownership, vacation property,
college education, retirement, etc.) and develop a financial plan for the
future. To get started, consider meeting with a financial professional. A
financial professional can help you get off on the right foot, by helping
you develop a long-term financial plan that will make your hard earned
money work harder for you.

Explore Life Insurance

If you're still living the "Friends" lifestyle and spend most of your
time at coffee shops like Monica, Joey, Phoebe, Chandler, Ross and
Rachel, you may not need to think about life insurance just yet. However,
"Xers" do settle down, get married and start families. If you have
dependents (a spouse, children or aging parents) you need life insurance.
The good news is that many employers offer life insurance as an employee
benefit. But this may not be enough. First, talk to your benefits or
human resources manager to learn more about their offerings and how to
enroll. Then, see an insurance agent who offers insurance from major
providers to determine if you may need more.

Deal with Debt

"Debt is one of the biggest financial problems facing young adults," says
Chris Newell, principal of Newell Financial Corp. in Little Rock, Ark.
When it comes to paying off debt, Newell says to start high. Rather than
concentrating on paying down a little of each credit card balance, find
out the interest rate for each card -- it should say on the monthly
statement -- and pay down the cards with the highest debt and interest
rates.

"First, make a pledge, 'no more additional credit card debt,'" Newell
says. "Then, start paying off the highest debt cards. As soon as one card
is eliminated, continue the same payments on the other cards. Never
reduce this monthly debt payment amount until they are all paid off. You
will have to be disciplined and pay substantially more each month than
the minimum balance."

Contribute the Maximum

401K plans and IRAs offer the best opportunities to take advantage of
tax-deferred savings and contributions from your employer. If you're
working, ideally you should contribute the full amount to your 401K plan
that you can. But at the very least, contribute up to the match offered
by your employer.

An IRA provides tax efficiency to set aside money for retirement. For
example, by contributing to a Roth IRA (just one type of IRA), you don't
pay income tax when you withdraw the money (including gains, dividends
and interest) assuming you are age 59- and the account has been open for
five years. If your annual income is less than $95,000 for a single
taxpayer or $150,000 for married couples filing jointly, you can
contribute to a Roth IRA.

Develop a Support Network

This is the age of information. Most likely, you may have a cell phone,
voice mail, pager and a handheld computer. You prefer to learn through
conversation and communities rather than reading text books and reports.
The same goes for financial planning. "Xers" are much more willing to
talk about their financial situation than their grandparents or even,
parents. Embrace this new freedom. Schuldt recommends creating a
community, either online or an old-fashioned investment club, and learn
from each other. Whether you pool your money and start investing in the
stock market or share investment tips and advice, communities offer a
fun, easy way to get interested in your financial future. Or go to
IHateFinancialPlanning.com to plug into a growing community of people who
share a similar hatred for financial planning.

Keep Dreaming

What is that you really want? Home ownership? Early retirement? Financial
independence? It's important to understand your financial goals and to
realize that your actions today either bring you one step closer to -- or
pull you one step back from -- your goals. If you plan to buy a home in
five to ten years, are your actions today helping or damaging your credit
rating? Not only do you need a down payment to buy a house, you need an
established credit history and a record of on-time payments.

The bottom line for "Xers" is that you should ignore the marketing
messages geared towards cynical, unmotivated slackers. It's not too early
to start planning for your future and saving for retirement, says
Schuldt. Consider the big picture. The decisions you make today about
your career, education, debt and retirement will stick with you and shape
your future. So, invest in yourself. Start small. And ignore the
stereotypes.

Securities available through PrimeVest Financial Services, Inc., an
affiliated registered broker dealer, Member NASD/SIPC. Call (320)
656-4300, ext. 64691, for a prospectus, which contains complete
information on expenses and charges. Read it carefully before you send
money or invest.



About The Author

Courtesy ARA Content, http://www.ARAcontent.com;
e-mail: info@ARAcontent.com

EDITOR'S NOTE: http://IHateFinancialPlanning.com is part of the ING Group, a worldwide
leader in the fields of insurance, banking and asset management, with
more than 100,000 employees in 65 countries.