How to Be In Charge of your Finances: Financial Planning Advice for Millennials featuring, Sophia Bera of Gen Y Planning

How to Be In Charge of your Finances: Financial Planning Advice for Millennials featuring, Sophia Bera of Gen Y Planning

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Finances in general brings up a lot of stress for people… especially millennials. A recent study shows that Millennials would rather go to the dentist than the bank. 

That is were Sophia swoops in to save the day! Sophia Bera is a financial planner specializing in young people. After working in traditional financial planning firms since 2007 she quit her job at a NY start-up to launch her own firm, Gen Y Planning. Now, she runs a 6-figure online business from her laptop. Her recent honors include the “Top 40 Under 40” by Investment News, “10 young Advisors to Watch” by Financial Advisor Magazine, and “10 of the Best Personal Finance Experts on Twitter.”

Sophia’s been quoted in the New York Times, Wall Street Journal, Forbes, Fortune, Business Insider, Yahoo Finance, CNN Money, CNBC, Huffington Post, Mashable, LifeHacker, and plenty more. And we are so honored to feature her on our podcast for you today. You’ll be only better and smarter, sharper, and wiser having listened to her advice and checked out her amazing tools and resources.

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In this episode, you will discover: 

  • 3 step action plan to get in control of your finances.
  • How to plan if you are looking to start your own business someday.
  • The top habits for successful management of your finances
  • The down low on student loans and strategies to become debt free!

 


Q:  Young professionals and students feel a TON of stress around the area of their personal finances. We did a survey to get to know what is on the mind of students, and when it comes to their money, they say they are super fearful and don’t trust banks. A study by Scratch Viacom Media Networks revealed that millennials would rather go to the dentist than to a bank! In the area of finances, there is also a lack of confidence and personal management skills. What is your advice for people that feel this way and have no clue even where to even begin? 

First thing, take inventory of what you have and what you owe. The difference between those things is the net worth. That is a good place to start. Start to build financial security, a strong foundation. A strong foundation consists of 3 actions: 

  1. Paying off any high interest rate credit debt. (Debt is never comfortable or easy to deal with. Get it taken care of and paid off or set an action plan to do so.) 
  2. Building up an emergency savings. (You should have at least 1 month of your income set aside for emergencies before you start to pay off student loans. Ideally, aim to have 3 months of income set aside.)
  3. Saving up for retirement. (Set up a 401k or ROTH IRA. This article can help if you don’t know the difference. Also, do your homework on your employment retirement plan. For example, what is the company match? How does it work? If you are not taking advantage of the company match, that is free money that you are leaving on the table!!)

Taking actions, even just baby steps, in each of these areas will really help move your finances forward!

(Need help understanding financial terminology, Sophia has 17 investing terms you need to know.)

Q: What about entrepreneurs? So many millennials want to start their own business someday. What financial steps should they be taking? 

Many of my clients are entrepreneurial minded. They don’t necessarily work for themselves, but they think about things in a really innovative way. They have side hustles, side businesses. One easy action step that many people forget it setting up a retirement account for your small business. Many people qualify for a  ROTH IRA. I love ROTH IRAs for young people. The money to put in grows tax free, and when you withdraw it in retirement, you don’t pay taxes on that money. You can put up to $5500 per year in a ROTH IRA. If you are self employed, you can set up a SEP IRA, or a Solo 401K. These are great tools that are out there that will help you save.
 Click here for more advice about being an entrepreneur. 

Don’t miss out! Sophia is putting together a course all about smart and easy retirement plans for millennials. Sign up at genyplanning.com/waitlist.

 

Q: What are the tops habits for millennials when it comes to successful management of their finances? 

  1. Set things up automatically. Even if it is just $100. Set it and forget it. The small change will have a HUGE impact over the lifetime of your career.
  2. Once those automatic systems are set up, schedule check ins with yourself. If you are single, schedule a monthly check in. If you have a partner, maybe a quick weekly check in is necessary. Taking the time to have “money dates” with yourself to check in will allow you to make the small changes you need to have a huge impact!
  3. Talk about it. Finance and money is often considered a taboo subject. Not talking about it only continues to the cycle of poor personal finance management for young people. Set up savings goals for yourself. Put it on the calendar. Have your friends and family hold you accountable.

Q: 54% of millennials have or plan to start a business. A lot of the time, they are doing it through the “side hustle” approach. They have their day job, and building their passion project on the side.

I am a huge fan of the side hustle. And the reason why is because if we can streamline our finances with our current monthly income that is coming in, that side hustle is just gravy. It;s just extra money that we can be really smart with to help us turbo charge your financial goals. Get yourself in a smart financial position first before you launch your business.

It’s an exciting time. I think entrepreneurship the new job security of my generation. We are going to be launching buisness and guess what? We will be hiring other millennials. We are going to be really building our own small businesses because It’s easier to start a business than it ever was before! You don’t need an office space. You can be a co-wokring space, or you can work from home. You don’t need to hire 5 employees right away. You can be just you… and then hire a VA. I launched my business 3 years ago, and it had been 5 years before, I couldn;t have launched an entirely virtual financial planning practice. The technology was just not there yet. It’s an exciting time, I am curious to see the new businesses coming out of it. 

Q: Yes! In terms of accelerating your career, there is extreme value in continuing to dabble with your passion and put it into action. It gives you something that makes you indispensable.

It’s really important for young people to know that you are your own brand now. If you don’t have a website that is your own personal brand, get one and start thinking about it! I always thought of myself as an actor and never thought I would become a financlal planner, and now it is my secret sauce. As a actor, I can hop on a podcast and chat with people with ease, and get up on stage and give a presentation. That stuff is really fun for me because of all the skills I picked up along the way. As young people, we start gathering those skills. All of those things build up throughout your life and make you unique. 

Q: 1.2 trillion dollars of student debt in the US, and the average loan amount is is $33,000. However, we are in the midst of global research (sponsored by American Express, Ernst & Young, Nobel , Nortis), asking young men and women all over the world in all level of education. When they bring up thier student loans, we hear $160,000, $180,000, $120,000. It is startling. And this is not just for those who pursued a MBA or went to an Ivy League school. This is a result of getting a public school education. I am really trying to advocate this conversation so that employers better understand that when they are asking for more money or pushing for compensation, its for something much more simple. They are not buying homes, cars, etc… There is not true transparency on the subject. What are you seeing and hearing about student debt? 

  • If you student loans are more that your current salary, look into some of the loan forgiveness plans. One of the best ones out there is Public Loan Forgiveness, especially if you have 6 figures worth of student loan debt, and you are able to work for a nonprofit or the government for a 10 year period, you can get the balance of your student loans forgiven, and you can use that program in conjunction with the other income driven programs, such as, Pay As You Earn or Income Base Repayment.” Then your monthly loan payments are limited by a percentage of your income. Be careful. Public Loan Forgiveness is the only loan forgiveness where the balance is NOT taxable. If you do another debt program, your debt is then added to your income for that year, and you have to pay taxes on that. Click here to read more. 
  • Research different loan options. Look at the interest rates and see if you can get them paid off quickly at a high interest rate. 
  • Be REALLY wary of taking out any Grad Plus Loans. One thing I discovered was that the interest rate on these loans is 6.84%, but they charge a 4% origination fee. So that is if you borrow $12,500 a semester, you are playing an extra $500 just to borrow that money.
  • If you have private student loans, refinance! Refinance them to a more affordable interest rate. There also other companies that can help. Check out commonbond.co, and sofi.  
  • There are also really cool start ups: Student Loan Genius. My friend Tony is the CEO, and it is a 401k match for your student loans! 

 

“Just start. Start doing something small. That momentum will halve you take the next step forward.” – Sophia Bera, Founder of Gen Y Planning

 

Don’t miss out! Sophia is putting together a course all about smart and easy retirement plans for millennials. Sign up at genyplanning.com/waitlist.
Be sure to sign up for her newsletter! Believe us. It is fantastic. 

Stay in touch Sophia:
Website: genyplanning.com
Twitter: @sophiabera

 


 

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