The Millennials age have a bad reputation for their financial decisions. This is because the way they deal with their debt or job always meets with a lot of criticism. There is also a reason for their financial mismanagement. You can think of increasing college loans, the effects of the great recession and the higher housing cost. Millennials do not prefer the criticism they get from the other age groups. But some of the things they have to accept as the truth.
Here you can know about the financial details of the millennial age group. It will help millennials to know what they have to learn to handle their financial issues.
Table of Contents
What is so special about Millennials age?
Millennials age is the largest living generation. They are even surpassing the amount of the baby boomer gen. They are the people who are born between 1981 and 1996. Also, they are unique because they grew up during a time of rapid-fire technology. They got great access to smartphones, social media, the internet and a lot more.
Further, there is a generation called old millennials who did not have access to smartphones.
What is the earning potential of millennials age group?
When talking about the earning power the average salary of the millennial age group is $47,034. But one research found that the millennial households are poorer than the other generation. Plus another study revealed that the income of the millennials age between 25 and 35 struggled with their finance. The beginning salary of the millennials was 20 per cent less than the baby boomers when they were that age. The average networth of the millennials was $8,000.
One another factor is the student loan debt. The millennials have more student loan debts than their parents. They are half as likely to own a home and are not likely to retire at 75. The increasing student loan debt also played a major role in the decreasing homeownership of the demographic.
It is fact that millennials earn fewer amounts than their predecessors. But they take their finances seriously as they save for retirement and also invest. Also, they have big emergency funds with the average rainy day fund which can cover six months of living expenses.
Also read: Loan 101: 4 Different Types of Loans for Individuals
Are millennials leaning on their parents for finances?
According to the studies, 37% of the millennials stopped depending on their parents for financial support, while other 63% somewhat wanted the support of their parents. So it can take a bit of time for an average millennial to stay dependent and buy a home. Then they can stop relying on their mom and dad fully for finances.
Many of them are eager to escape from their parent’s strings and lead a life of their own.
What is the life view of the millennials?
It seems the millennials see their job and retirement quite differently than their grandparents and parents. They are dubbed the instant gratification generation as they do not prefer to work for a big company and later be free from financial worries. They want to, first of all, pursue their ambitions and are desirous of going for their dream job. Also, they like to work for a startup than a full-fledged company. Further, they want a job that offers them a work-life balance so they can have fun when they want it. They do not want to wait to enjoy life after saving as they want to experience everything when they are still young.
They do not want to retire early because they like to work for a long time as long as they can. So their decisions are not completely focused on financial safety. They want to enjoy things in life that their parents got only when they got older and financially independent.
How can millennials learn to improve their finances?
There are many factors against the millennials but only a few things are available to help build their net worth. They have to pay off the debts as fast as possible or get as little debt as possible. It will be useful for them. Although it may seem impossible for them to get a college degree without the student loan debt they can improve by offsetting that debt by working. Also, they can try to pay the student loans when they are still in college to avoid interest.
They can also learn to avoid customer debt and also try to live below one’s means after their graduation. These are useful tips to slash debts. In this way, they can add cash to invest and increase their net worth. If the main issue is the student loan they can set up payments depending on the current income. This is a useful option too. In many fields, student loan forgiveness is available so they can make use of this too.
Those who are part of the millennial age can create a certain budget and spend money according to it. It can vastly boost their financial outlook. Also, they have to make sure if the budget is realistic or not depending on their expenses and the style of spending. They can try to make small changes in the way they spend which can immensely help them to live without spending more. They can set financial goals to buy a home or also properties to invest in.
One of the best things millennials can do is to invest is to improve their finances. There are many expert financial advisors available to help you reach your financial goals. They will help you to determine the best options to invest in.
The key factor in investing is investing early as it will offer great earnings in the future. Many of them cannot rely on social security so the best thing they can do is to plan for retirement. Like many millennials age groups are great at it. So these are the few actionable steps millennials can take to secure their finances.
Conclusion
There is more scope for millennials age when they see where they lack the skills to improve in finances. They prefer to follow their heart but sometimes they have to listen to their brains too.
