By Christina Gustin
Everyone knows that the end of the year is a time for reflection and setting new goals. New Year’s resolution tips abound on every topic from weight loss to climbing the corporate ladder. Of course, there is plenty of expert advice about year-end financial planning, too, but it’s usually geared toward an older audience. Oftentimes, 20- and 30-somethings’ financial situations are not taken into account.
As year-end approaches, here are several tips to help Millennials and Gen Xers head into 2016 on solid financial footing.
1. Planning for the future: Look at your 401(k) allocation at least once a year
Now is a good time to look at the numbers and make sure you’re on track to contribute as much to your 401(k) plan as you can. Put away at least enough to reach the company match, if there is one. The magic of compounding is that time is on your side right now, but don’t ignore your investments. Ask for help reviewing them to make sure they still make sense for you.
Millennials and Gen Xers change jobs more often than previous generations, so it’s important to understand your options with 401(k) plans that get left behind. In general, the more of your assets you hold in one place, the harder they can work for you.
2. Charitable giving: Narrow your focus and donate wisely
Everywhere we turn, there are opportunities to donate to worthy causes, and while it feels good to say, “Yes!” every time someone asks for a dollar, your money will go further if you focus on a specific concern that is meaningful for you. Visit to find out what percentage of a charity’s total expenses are actually spent on programs and services delivered. Choose an organization that you can get involved with as a volunteer and you’ll get to see your dollars at work first-hand!
The old school thinking used to be, “How big of a check can I write?” But the next generation of philanthropists is looking for more personal, meaningful ways to give.
3. Estate planning and pre-nups: Don’t be afraid to think and talk about these things
A pre-nuptial agreement may be a wise choice if you’re getting married in the next year. This agreement protects each spouse’s financial interests, which is important if one partner owns his/her own business or has significantly more wealth or debt.
If you have children and/or considerable assets, it’s never too early to create a basic estate plan to dictate where and to whom your assets will go. Create a will to name who will care for your children if something happens to you.
In addition, check your beneficiary designations on insurance policies and retirement plans. These should be reviewed on a regular basis, and especially after a significant life event such as marriage, divorce or the birth of a child. Updating your beneficiaries as your life changes will ensure that your assets pass according to your wishes.
These decisions may not be fun, and thinking about our own mortality or worst-case scenarios is tough, but think of this kind of planning as a gift to your loved ones.
4. Buying a home: Determine how much you can afford
With current interest rates so low, it’s a compelling time for homeownership. You may want to buy your first home but are unsure of how to start the process. My advice is to work backwards — before you go house hunting, sit down with your budget and assess cash flow.
Look at what you’re currently spending on housing and determine what you can maximally afford. Identify the amount of your down payment. Then, enlist a mortgage expert to help determine what type of mortgage is best and how much your payment will be.
While you may still be paying down student debt and figuring out your big hopes and dreams for the future, these financial matters are important to keep top-of-mind as you journey through different life stages. Remember: setting up good financial habits and doing your research while you’re young will greatly benefit you in the long run.
Christina Gustin is a financial advisor with UBS Financial Services in San Diego. She graduated from UCLA and has more than 11 years of experience in the industry. Gustin reminds readers to seek out individually tailored financial advice and be aware that investing involves risks.
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