How To Start Building A Financial Safety Net

Millennials are often accused of forgoing financial planning and being more economically reckless than previous generational cohorts. Building a financial safety net is, supposedly, not high on our list of priorities — but new research suggests that for Millennial women at least, our finances are certainly something that concerns us. A study by Aegon showed that for 28 percent of women, being unable to support themselves or their families economically is their greatest financial fear, with a further 51 percent also revealing they have no real financial cushion, should things go wrong. But the good news is, even though research also suggests that we've drawn the short straw when it comes to money, adopting a few little habits can make a big difference when it comes to building yourself a monetary safety net.

There's little to no evidence to suggest that Millennials are any worse with our finances than our parents; indeed, some studies suggest we're actually better with it. The way we live is most largely the result of the set of tough and unbalanced global economic conditions that we've inherited. Interest rates have plummeted worldwide since the 1970s and '80s, rendering savings near pointless for many; the gap between the average house price and the average wage is widening exponentially in cities big cities; and as a result 54 percent of Millennial women are currently living paycheck to paycheck. Add to the mix the gender wage gap (the Pew Research Center discovered in 2014 that Millennial women made 93 percent of what their male counterparts took home) and you've got a whole heap of issues that make saving super difficult for many of us.

It's no wonder that trying to plan for the future can induce serious stress as a Millennial woman, but it is important to start now (if you can, of course). Here are a few tips for stacking paper for that financial nest egg.

Predict Your Future Spending Habits (If Possible)

Although obviously no one can fully predict the future, John Rampton of suggests trying to predict your spending habits to work out how much you may need for retirement. To plan ahead, he advises creating a budget, examining your current cash flow and expenses, and trying to estimate future spending based on your current spending habits (including mortgage or rent, insurance, and bills). He notes, "Keep in mind that some expenses will disappear, while new expenses will appear. For example, your mortgage will be paid off, so that expense will no longer be a factor. You may even decide to downsize your home, so utilities and property taxes may decrease. However, you want to consider new expenses like travel and long-term care." The baseline, at least, will give you a good idea of what kind of target you should be shooting for in terms of savings.

Match Your Savings With Your Career

Ted Jenkin CEO of oXYGen Financial told USA Today in 2015 that not everyone needs the same type of savings account: "Use different accounts based on your career," he recommended. "Which types of accounts you use to save for retirement might vary based on your career. Entrepreneurs, for instance, ought to shy away from putting money in retirement accounts where they would be penalized for taking early distributions. Those with a stable career, by contrast, can put money in traditional retirement accounts."

Use A Retirement Calculator

Nerd Wallet has a handy retirement calculator which allows you to plug in your age, current income, and savings to help work out when you'll be able to retire and how much you'll need to do so. It may look daunting, but it also provides a serious dose of reality for any of us who just don't have a clue about how much we may need.

Save Your Paycheck Before You Get It

As Nicole McDermott at Greatist notes, you can start saving your paycheck before you even receive it. Ask your company to split your paychecks between your savings and checking accounts, so you can stash your cash for the future right away.

Be Aware Of Your Spending Now

Being more aware of how you spend your money if one of the first steps towards changing your financial habits and saving more. Use a money management app like Mint or You Need A Budget, a spreadsheet, or a traditional checkbook to track your spending, and before you know it, you'll be more aware of what areas you need to cut back on.

Change Your Savings Habits Regularly

Life will throw a few curveballs at your now and again, and it's best to know how to deal when this affects your finances. If, for example, you're saving a set amount each month and you get a raise, add more money to your pot. Similarly, if you have a baby and you feel you need to cut back on savings, look at other areas in which you could make up the difference. As John Rampton of notes, "Things can change rapidly and frequently. That’s why you need to revisit your retirement plan often and make the appropriate changes, such as a new change in your lifestyle like having a child or a spike in inflation rates."

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