What a great weekend.  As a family, we drove to Bethlehem (North Carolina) on Saturday night to see a live nativity, but what made this trip even more noteworthy was something that happened on the ride home.  As we were driving home, I took a detour to check on the status of my boat at the repair shop.  (Basically, I just wanted to make sure it was still there.)  After putting my mind at ease, we turned around, and I was about to make a left turn back toward the main road when something caught our eye. 

Way off in the distance, further down the road in the opposite direction, we saw what looked like a rather elaborate light display, so I changed the direction of my blinker, and turned right, down a road I’ve never traveled before. As we approached this light spectacle, it became clear that this was no ordinary Christmas light display.  As we drove by, there was a small, handwritten sign in front of the house that invited us to tune in to a specific frequency on our car radio to enjoy a 15 minute light display that was synchronized to music. I had heard of such things, but I’d never personally experienced one, until now.

Now you might be wondering what this has to do with finances, so allow me to explain.  As a family, we were awestruck by the intricacy of the display, and given the fact that there were no other cars around when we pulled up (although several joined us once we were there), we knew that we had experienced something unique.  As we made our way home, I looked up to see what the kids were doing in the back seat. All I could see was the glow of their video games shining in their faces, and it struck me.  If we were all so focused on what was right in front of us, what would we be missing that is far from us?

Recently, we completed our first ever research report on the financial characteristics and behaviors of four generations: Early Baby Boomers, Late Baby Boomers, Generation X, and the Millennial Generation.  We found that the youngest workers in our research, the Millennials, were doing relatively well with short-term financial issues like cash management and debt but were not doing so well with longer term issues like saving for college and retirement.  Of those that participated in an online financial wellness assessment, nearly 3 in 4 (73%) said they had a handle on their cash flow, and nearly 9 in 10 (88%) said they paid their bills on time each month.  That was better than the next two oldest generations (i.e. Generation X and Late Baby Boomers).  The majority of Millennials are comfortable with the amount of debt they have, and over half (55%) of those that are not comfortable with their debt have plans for getting out of debt.

Things were not so rosy when it came to the longer term issues.  Only 17% of Millennials know they are on track for retirement, and of those with minor children, only 16% know how much they need to save for college and are on track to meet that need.  This is rather disappointing coming from a generation that some have called the most educated in history.  Certainly other generations, including my own Generation X, have our issues, so what I said to my children I say to all of us: PULL YOUR HEADS UP FROM THOSE VIDEO GAMES AND PAY ATTENTION TO THE WORLD AROUND YOU!

It is good that the Millennials are doing well with what is right in front of them, but they need to cast their vision further and see what is coming down the road.  Now is the time to start planning for families, buying a home, saving for education, and one day, retirement.  Now is the time to start building up an emergency fund.  Now is the time to start saving for a down payment.  Now is the time to contribute to 401(k) plans and IRAs.  Stop spending money on temporary things like iTunes and lattes and start investing in your future.  A 25-year old spending $5 a day on such things could be costing themselves $1,800 in emergency funds in 1 year, $9,700 toward a new car in 5 years, $22,000 toward a down payment in 10 years, or almost $400,000 toward retirement at age 65*.

Hopefully by now you are starting to see my point.  If we only pay attention to what is immediately in front of us, we might be missing a spectacular display that is farther away.  Of course, we don’t neglect to take care of our immediate needs, but we shouldn’t stop there.  Use this Saving for Goals calculator to help you cast your financial vision farther down the road—even if it means looking in the opposite direction.

*using this financial calculator and a 1%, 3%, 4%, and 7% interest rate, respectively.