Ways Millennials Can Start Saving More Money
For too long, Millennials have gotten a bad rap about money and their ability to save for a rainy day or retirement.
However, a new "Relationship With Money" survey by financial services firm Edward Jones found that not only do more Americans born between 1981 and 1996 consider themselves "savers" than those in their parents' Gen-X cohort (48 percent vs. 46 percent), but that Millennials also were better at socking away emergency funds (75 percent vs. 66 percent).
That's right. The same Millennials whose motto could be "Why buy a car when you can Uber?"
"This debunks the myth that Millennials aren't as financially focused as other generations," says Edward Jones investment strategist Nela Richardson.
And the survey isn't some outlier. It's supported by other research.
The Federal Reserve Survey on Consumer Finances found that while Millennials are deep in debt, more than 42 percent have retirement accounts, the highest share for those under 35 years of age since 2001. Part of what's driving Millennials' emphasis on saving could stem from lingering memories of the Great Recession.
"Back in the late 2000's, the oldest cohort of millennials entered the worst job market since the Great Depression of the 1930's, For younger millennials, watching their parents and other family members go through that experience may have also made them more aware of the risks of a market downturn or some other unexpected event, such as losing a home or a job, and so they're more conservative when it comes to spending and saving in their adult lives," says Richardson.
More millennials have gone to college than prior generations: Almost a quarter of 18‐ to 34-year‐olds hold a bachelor's degree or higher ‐ but this education has come at a price. A whopping 71% of bachelor's degree recipients took out student loans, the median debt hovering near $27,000. And we’re feeling the burn of those loans, too: A recent survey by MyBankTracker found that 30% of recent graduates would consider selling a body part if it meant getting rid of their student debt. One potential alarm bell uncovered by Edward Jones' sampling of more than 2,000 adults nationally age 18 and over: While 92 percent were honest enough with themselves to recognize there was room for improvement in their financial health, the very thought of saving money sufficed to make more than a third feel either "anxious" or "overwhelmed."
If that sounds familiar, here are three steps to consider:
• Identify your money-related emotions. People often have emotional responses to money. Getting a big bonus at work can make you feel euphoric; agonizing over what to do with it can be paralyzing even as the logical part of your brain (invest at least most of it) fights it out with the emotional part (splurge it all!). What's key is knowing that letting your feelings dictate your spending, saving and investing choices can lead to poor decisions.
• Develop a financial strategy. Keeping your cool starts with identifying your main goals ‐ a down payment on a new home, college for your children, a comfortable retirement ‐ and then sticking to a sound, long-term path for attaining them.
• Get an "accountability partner." Meaning, someone with whom you're comfortable sharing your finances. It could be a family member. Or a professional financial advisor, who has the perspective, experience and skills necessary to help you make the moves appropriate for your situation.
• Opt for a low-interest credit card; To meet your financial needs opt for one that's not going to rack up lots of interest. Look for factors like a 0% APR period, no annual fee, and free credit score services. Many rewards credit cards offer perks like points redeemable for travel or cash back, but making these cards work for you takes diligence and planning (not to mention, many of the better cards come with an annual fee).
• Skip the Starbucks; Spending $4 or $5 a day on a latte is running you upwards of two grand a year. You should, instead, invest in a decent coffee pot and make your own coffee at home. Don&apost waste your money on overpriced things you can make yourself. If cutting out money‐draining habits is too hard, start out small and opt for a cheaper option. For example, ordering an iced Americano and adding milk is half the price of an iced latte, and tastes nearly identical. That's a saving of $1,000 a year without making any big sacrifices!
If you come up with ways to save money by cutting back, finding some way to earn more money, and having a budget then you will have a guaranteed strategy for getting yourself out of debt. Plus once you are out of debt you will also notice an increase in your income.
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