Millennials and Gen X Are Ready for Change — With the Help of a Financial Plan

The past few years have brought unprecedented change, not only in how people live and work, but also in what they’ve come to prioritize in their lives. For many millennials and Gen Xers, that has meant rethinking some of their fundamental values: where they want to live, what they want for their families and careers, and which dreams they want to go after.  

In fact, according to new research from Northwestern Mutual, 98 percent of millennials and Gen Xers have a significant life goal they are trying to reach, and even uncertainty around the economy isn’t even enough to deter them from those goals: 95 percent say the past two years have shown them the importance of pursuing goals now versus waiting for someday, and 88 percent say they’ll forge ahead even if the economy experiences a sharp decline.  

But pursuing big life changes amid a world that is still ever-shifting requires emotional and financial preparation — and the research shows that those who have taken steps to create a financial plan feel the most empowered to go after their dreams.  

Taking plans off hold 

The 2022 Northwestern Mutual Great Realization survey, which polled 1,000 Americans ages 26 to 57 across the country, reveals just how great the sense of urgency is to move ahead with new plans. Not only are 79 percent of people planning a major life change in the next two years, more than two-thirds fear if they don’t start acting on them in the next 12 months, they may never get around to making changes.  

The life goals people want to pursue in the near term: 

• Traveling for an extended period of time (30 percent) 

• Buying their dream home (27 percent) 

• Having kids (21 percent) 

• Starting a passion project (21 percent) 

• Moving to a new city or state (20 percent) 

• Purchasing a vacation home (12 percent) 

• Retiring early (11 percent) 

• Getting married (10 percent) 

Despite having a clear idea of what they want to accomplish, nearly three out of five people who can’t get started on their goals right away cite finances as the top reason why. This could be because they have yet to map out what it will take to get there: Less than half of those with goals say they have a “good idea” of how much it will cost to pursue them, while a mere 16 percent say they know the exact cost. As a result, 88 percent believe they’ll have to make sacrifices of either time or money to make their dreams happen.   

Financial confidence through planning  

Even if they haven’t crunched the numbers just yet, Americans understand that making smart money decisions will be key to pursuing their plans with confidence. Nearly all — 92 percent — say they believe a financial plan can help them pursue their goals and weather an economic downturn at the same time. However, only 52 percent of those surveyed have started a plan, although another 43 percent say they intend to.  

The best proof point to stop putting off financial planning? The progress being reported by those who have a plan versus those who don’t: 49 percent of those with a plan and 55 percent of those who’ve sought advice from a financial professional say they’ve made “a great deal” of progress toward their life goals over the past two years. On the flip side, only 15 percent of those without a plan and 18 percent of those who haven’t spoken with a professional could report the same.  

How a financial plan helps you reach goals 

A financial plan doesn’t look at just one area of your life. A comprehensive plan starts with a conversation with an advisor about your goals for today and tomorrow. In fact, one big misconception is that a financial plan is focused solely on the future — about a quarter of respondents believe you only do financial planning for long-term goals like retirement or saving for college.  

In reality, a financial plan looks at where you are today and where you want to be in the near, medium and long term, and then provides a roadmap to help you get there. A financial plan also isn’t set in stone — it’s personalized to your situation and should be flexible enough to help you pivot when your life or goals change.  

Here are a few ways having a financial plan and working with an advisor can help you get closer to your goals.  

• You’ll have a clearer picture of how to save, spend and grow your money. Whether you’re trying to plan your next family vacation, start a new business, or invest for your dream retirement, your finances are intertwined. An advisor can look at your income, your needs, and the timeline for each of your priorities and goals, and help you figure out the smartest way to allocate your money toward each of them. Your plan should be able to balance the things you want to do today without sacrificing what you need for tomorrow.  

• You’ll have strategies to protect your finances. If there’s anything the past few years have taught us, it’s to be prepared for the unexpected. A plan can show you how much to keep in an emergency fund, and it can help you determine how much insurance you’ll need to protect your family should something happen to you or your ability to work. Protecting your finances gives you the assurance and confidence that you can pursue what you want today even if big, unexpected costs come your way.  

• You’ll have a way to manage debt. Debt is a reality for most people, but if managed properly, it doesn’t need to keep you from reaching other goals. A financial advisor can look at the debts you have and provide strategies for paying them down. Knowing you’re making steady progress toward reducing your balances can help you feel less stressed about how you’re spending your money today.  

• You can build out a plan for your retirement. When you’re ready or nearly ready to retire, an advisor can look at all your assets and investments and come up with a range of financial options to help you live the retirement you want. Not only will a retirement plan give you clarity on how to generate retirement income, an advisor can help show you how to draw down from your assets in a tax-efficient way.  

Different parts of your life aren’t siloed from each other, so the different aspects of your finances shouldn’t be, either. Taking the time to discuss each of the things above with an advisor can give you a bigger view of your financial picture and help show you what you can do to get to the life you want. Ultimately, by starting a financial plan, you’re gaining the confidence to stop putting off your goals and dreams — and start turning your someday into today.