As the mom of 2 Millennials, I think often of the financial challenges my daughters face. Millennials have a lot of unique challenges, including a soft economy with no end in sight. Entry-level jobs are also of much lower quality today. It’s more likely that a recent graduate will be forced to endure a minimum wage internship than start at a healthy salary. It’s not an easy time to be a young adult.
If you’re aware of the potential challenges, you can work hard to make sure they don’t affect your financial future!
1. A lack of preparation for financial emergencies.
Everyone needs an emergency fund. While the lack of an emergency fund is common within every age group, millennials are especially likely to not have any money set aside for emergencies. Strive to set aside 3-6 months of living expenses and you’ll be prepared for most financial emergencies.
2. Failing to take advantage of 401(k) matching.
If your employer offers 401(k) matching, take advantage of it. Not only will your money work for you, but your employer is giving you the same amount as what you’re investing. Considering future growth, your employer could be handing you a fortune – for free!
3. Becoming a homeowner.
The rate of homeownership by younger adults continues to decline with each passing year. Before signing that expensive lease in the fancy apartment complex, think about the future. Downsizing today can mean homeownership in the future.
4. Becoming debt-free.
Younger adults have more issues with debt than any other generation. The high cost of a college education and medical care are two of the primary culprits. An irresponsible use of credit cards plagues every age group. It’s easy to accumulate debt quickly.
Eliminating debt can take years. Make a plan to deal aggressively with your debt. Get started today for a brighter tomorrow.
5. A failure to plan ahead.
Your 20’s and 30’s are an expensive time. This is when most young adults get married, go on a honeymoon, and have children.
Few can accommodate these expenses without a significant amount of planning and preparation. Avoid waiting until the last minute to prepare for your upcoming expenses.
6. Not choosing a college major with employment in mind.
College has never been more expensive. While majoring in art history or the trombone might sound intriguing, there are few employment opportunities within these fields. Consider the future when planning your college years.
7. A lack of health insurance.
You may be at the healthiest point in your life, but serious illnesses and accidents can happen to anyone. It may be expensive, but health insurance is necessary. Even a plan with a high deductible is better than nothing and will protect your wallet from a major health issue.
8. A failure to save for retirement.
It’s common to think that you’ll have plenty of time in the future to save for retirement. All those 65+ year olds you see working in fast food and retail thought the same thing.
Get in the saving habit early in your career. Over time, your investments will grow to fund an enjoyable retirement. Start early enough and you might be able to retire years early, too!
9. Failing to create and follow a budget.
Whether you earn minimum wage or $1 million per year, you need a budget. A budget is a great way to limit your spending and make yourself aware of your financial situation on a monthly basis.
10. A lack of education.
Millennials face many financial hurdles that grow taller each year. Now is the time to create a budget, plan for the future, and embrace a little austerity. Suffering a little today can result in a bright future. Taking it easy today ensures a challenging future. The choice is yours.
Do you have suggestions to help Millennials