The millennial generation is unique in many ways: raised with advanced technology, everyting is documented on social media and the avocado market has never been stronger.
But one major way that millenials are changing society is in the job market. There is a new trend of free agency among young professionals, meaning they don't view themselves as a member of one company for the duration of their career. Instead of trying to advance on the ladder within a single organization, they move from company to company as they grow their qualifications, seeking higher positoions and greater pay.
While boomers spent their entire career with a single employer, millennials are changing jobs every three to five years and could have upwards of 15 employers in thier lifetime.
This new employment model is not a bad thing, but there are common mistakes millennials may be making when they change jobs - and it may be possible to avoid some of them.
Impatience can be costly.
Before changing jobs, make sure you take a close look at your company's 401(k) plan. If your employer matches your contributions, check the vesting schedule of those matches. While some plans allow immediate vesting - meaning as soon as the matched contributions hit your account, they're yours - often you have to spend a certain amount of years at the company or you forfeit the money.
Before you jump ship, make sure it won't be costing you thousands of dollars in retirement savings to do so. If you need to stick it out a few more months to hit that threshold, do it.
Keep on top of your retirement funds.
401(k) plans are unique to each company, but that doesnt't mean your money has to stay there when you leave.
Retirement plan balances are always transferrable so you can take the funds with you when you leave your current job. If your balance is realatively low, you can simply transfer if into your new company's plan and build on top of it. But if you have six figures sitting in your account, you may want to look into an Individual Retirement Account(IRA) to take advantage of the flexible investment structure.
Make sure that transferring your balance is a priority when changing jobs. Forgetting to do so means years down the road you- or your heirs if; you've passed- will be tracking down your savings from the 15 companies you've worked for, some of which may have been bought, sold, relocated or closed entirely. Avoid that stress later and get it handled now.
Use your side hustle wisley.
One thing I admire about the millennial generation is they have perfected the art of a side hustle. Talk to anyone under 35 and they likely have some sort of alternative income helping them pay the bills, whether it's a second job, an oline shop or a marketable skill.
The one mistake you may be making when it comes to side hustles is not using it to help your retirement savings.
Having a side hustle may allow you the flexibility to increase your contribution percentage for your company's 401(k) plan since your supplemental income will help cover your expenses. In addition, starting a SEP-IRA for yourself to hold some of your extra income for the future is a good way to help preapre for retirement while you're young and have the time and energy to work beyond the normal workday. Within certain limits, you can put up to 25% of your self-employed earnings into a SEP-IRA on a pre-tax basis.
Dont' get stuck under a house
You may think there's no place like home but purchasing a house may not be the best decision for you if you plan to jump jobs every few years. If you rent an apartment, it will be a lot easier to move close to your new job without the cumbersome and expensive experience of selling your house.
The lesson:
There is noting wrong with being a free agent and bouncung to higher - paying jobs every few years. Just make sure you're thinking through the decision and making sound financial choices with each next step.
