Contrary to popular perception, #Millennials are saving a significant portion of their earnings —only not for #Retirement like the generations before them. In a recent report released by Merrill Edge, the majority of millennials would rather spend their earnings on travel (81 percent), dining (65 percent) and fitness (55 percent) instead of future financial stability like retirement.

In light of saving for their desired lifestyle, a retirement survey conducted by Transamerica revealed that millennials are aware that they need to save for retirement, and they can do more to improve their retirement mindset by learning more about retirement investment products.

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Seventy-two percent of those surveyed concur that they are not as knowledgeable about retirement investing as they should be. Financial experts agree fervently with this statistic and have agreed to weigh in, providing practical tips that can take millennial retirement plans to the next level while putting them on the right path to securing a more financially-secure future.

Earn the right to invest

Many financial planners suggest that it is vital to start investing in a retirement product now —as in yesterday! However, Doug Boneparth, a financial advisor for millennials, founder of Bone Fide Wealth, LLC, and co-author of "The Millennial Money Fix," calls investments the “sizzle of personal finance” and stresses that one must earn the right to invest. He suggests that there are key financial milestones that must be achieved before ever discussing the possibility of investing.

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In a recent phone interview Boneparth states, “Millennials need to understand that there are fundamental lessons that need to be learned and accomplished before they consider risking money on investments.”

The fundamental lessons he was referencing is a theme that resonates throughout the book, becoming financially literate by first mastering cash flow and establishing a cash reserve or emergency fund —a safety net serving as protection from unexpected financial curve balls that may arise. He continues, “Once you successfully check off the boxes [of the fundamental lessons], it becomes easier to identify, quantify, and prioritize your financial goals.”

Funding your emergency fund should be a priority

As Boneparth stated, having funds available for emergencies is essential to financial success.

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Having a solid cash reserve can make swiping a high-interest credit card unnecessary if your car breaks down or you recieve an unanticipated medical bill.

Most financial experts advise that the emergency fund should have at least three to six months of day-to-day living expenses saved. Sound like a daunting task? Debt expert and co-president of Freedom Financial Network Sean Fox recommends, “Start with the level of expense that causes you to rush to a credit card. Is it a car repair bill for $250? A medical bill for $500? That is the amount to start with. Have at least that available and keep building.”

Create a budget and stick to it

Take the time out to construct a reasonable budget. This will allow you to visibly see exactly where your money is going. Fox suggests, “Create a simple budget line item for savings in the expense column to treat as a mandatory bill.”

Spend less than you earn

It is fairly easy to blow through money without realizing where it is actually going. Which is why making a budget that you can adhere to, finding expenses to eliminate, maintaining an emergency fund, and paying off debt are vital. Taking these steps can put you on the the right path for spending less money than you make, ultimately giving you the power to save more money for retirement and investing.

“Before we look to tackle the debt (which is important for sure), let's start spending less than we earn,” explains Trevore Meyer, #Certified Financial Planner and founder of Presence Financial.

If you get a bonus, raise, or small windfall, avoid lifestyle creep or splurging on items that have no long-term value. This could be upgrading to an expensive wardrobe, frequently dining out at lavish restaurants, or buying a luxury car. It is okay to reward yourself, but keep in mind that allocating funds to your emergency fund, retirement nest egg, and investing can be rewarding as well.

Get out of debt

Pay secured debts (debts secured by an asset such as a house or vehicle). If these are not paid on time you can risk losing the asset. It is also recommended to stay on top of paying off student debt if there is any. Then pursue getting rid of credit card debt.

For individuals with a large amount of debt, specifically high interest credit card debt, Michelle Waymire, financial advisor and founder of Young + Scrappy, suggests, “Consider applying for something like a balance transfer, to delay having to pay interest on your balance for a year. This allows you to tackle the principal much more quickly, while also simultaneously freeing up cash to go towards long-term goals such as retirement [savings].”

Getting a balance transfer with no interest rate permits more time to pay down debt without getting hit with compound interest, thus breaking the cycle of debt.

Certified financial planner, founder of Peterkin Financial, and author of "If You Love Your Family, Save Like It" Nicole Peterkins warns, "Beware of zero percent interest balance transfers on your credit cards. If you don’t pay them off within the allotted time frame, they’re usually a worse deal than you had before [transferring the balance].”

Most balance transfer cards offer the zero percent introductory rate for 12 to 21 months. Assess whether you will be able to pay off the debt before the rate is discontinued. If you will not be able to pay down the balance before the introductory rate expires have a plan to take care of the outstanding balance, continuing to transfer the balance until it is completely paid off could be a viable option.

Get all of the free money

If your employer offers a 401(k) or other qualified retirement plan, pay yourself first by contributing to it. These accounts are tax deductible. If your employer is willing to match your contribution (usually within the range of 3% to 6% of your annual income) be sure to contribute enough to get the full match amount because if you do not, you are leaving free money on the table.

Peterkins strongly advises, “Always take full advantage of your employer match, even if it means you have to drive Uber or do a side hustle to pay your bills, because it’s free money [for you].”

If your employer does not offer a matching contribution, do not get discouraged says Abby Eisenkraft, CEO of Choice Tax Solutions and author of 101 Ways to Stay Off the IRS Radar. She states, “Even without an employee match, you are getting a federal and state (where applicable) tax break.” She adds, “Many people don't understand the tax savings, and think that if there is no employee match, it's not worth getting into the 401(k) plan, but that's a failure to understand the tax return. [You are] saving hundreds and possibly thousands each year by reducing your taxes, [making] the 401(k) a great vehicle to save.”

Self-employed individuals can save for retirement too

If you are a freelancer or self-employed millennial, there are retirement savings plans that you can participate in as well. Consider opening a SEP-IRA and Self Employed 401(k), commonly called a Solo 401(k) plan. They offer very low or no annual administration and setup fees. Both accounts can be activated with low-minimum initial investments

Larry Solomon, director of investments and financial planning at OptiFour Integrated Wealth Management, favors the Solo 401(k) because its flexibility and higher-contribution limits.

Solomon explains, “If you are a 20-something sole proprietor, with a SEP-IRA, contributions are limited to roughly 20 percent of net income, so if you net $40,000 from your business, you could contribute around $7,500 to a SEP-IRA . With a Self Employed 401(k) plan, you can defer 100 percent of your earnings up to $18,000 per year, plus an additional profit sharing contribution of up to around 25 percent of earnings, so in this same example, the same self-employed person could save around $25,500 per year for retirement before taxes, the $18,000 salary deferral plus a $7,500 profit sharing contribution.”

Do not use retirement funds as a piggy bank

If you are late on a mortgage payment or your car is at risk for being repossessed, do not run to a retirement savings account to rescue you. Find other ways to finance these debts.

“Your 401k and IRA are off-limits,” Eisenkraft firmly cautions. “These accounts are not to be used like a piggy bank. Any money you withdraw will be taxed as ordinary income, and there will be a ten percent penalty. These accounts should be maxed out every year if possible and not touched. You don't want to be 60 one day with no savings.”

Compound interest coupled with time can equal millions for a millennial during retirement

Compound interest refers to the interest earned on an account each year that is added to the principal balance. As a result, the balance not only grows, it does so at an increasing rate. The sooner a millennial gets started with saving for retirement, the better.

Timothy Wiedman, retired college professor of Doane University with a certification in financial planning, admits that early on he did not fully grasp the true earning power of compound interest. As a result in his early 20’s he wasted discretionary funds on depreciating assets including convertible European sports cars that usually developed expensive mechanical problems. He always believed that he could catch up and save for retirement later on in life once he established his career. As a result of this thought process, he opened his first IRA account at almost 32 years of age.

“[Since] the earning power of compound interest is based on time, an initial delay can have severe consequences,” shared Weidman.

“Opening a Roth IRA (Individual Retirement Account) as early as possible is vital, and it doesn't require any particularly savvy investment knowledge. For example, if a 23 year-old fresh out of college puts $3,000 per year into a Roth IRA that earns a 7.8% average annual return, forty-four years later at retirement, that $132,000 of invested funds (i.e., $3,000 per year times 44 years) will have grown to $1,009,275. On the other hand, starting the same Roth IRA twenty years later (investing in the same index funds) will yield very different results. Putting $5,500 per year (the current maximum for folks under age 50) into that Roth IRA for twenty-four years still equals a total investment of $132,000 (i.e., $5,500 per year times 24 years). But at retirement, earning the same 7.8% average annual return, those funds will have only grown to $357,167. The delayed start will have cost that investor more than $652,000.”

Due to the longer duration of time that millennials have to invest in their retirement portfolios, Certified Financial Planner™ Paul Ruedi Jr. of Ruedi Wealth Management, a millennial himself, advocates for investing entirely in stocks. “It is more important that millennials invest 100 percent in stocks than anything [else] in their retirement portfolios, because they have the capacity to ride out any temporary declines in the market along the way. They should ideally invest in stocks using highly diversified, low-cost index funds.”

“Simply put, millennials have the benefit of a long-time horizon,” adds Robert R. Johnson, president and CEO of The American College of Financial Services.

Johnson continues, “Time is the greatest ally of the [millennial] investor, as time allows for compounding. None other than Nobel laureate Albert Einstein is rumored to have said that ‘compound interest is the eighth wonder of the world; he who understands it earns it, he who doesn't pays it.’”