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Millennial’s financial well-being are better than we thoughtIf you thought that Millennials need financial advice- you may be right. But it may be different from what you think they need. Their finances are actually in good shape. Not only that, they seem to be on top of their personal finances. We all worried about the future of this country because we thought that the generation poised to take over is in deep financial trouble. After all, their student loan debt is a very serious matter. If they are saddled with debt, how can they invest to grow their financial worth? One of the first to be sacrificed when you have debt is your investments. If you have extra money after your debt payments and emergency fund, that is when you will invest. You will also curb your spending. 70% of our economy is driven by consumer spending. If the Millennials will grow up to have very restricted spending habits, what will happen to our economy? These should be enough reason for us to be concerned about the personal finances of Millennials. The data coming from Navient.comrevealed the state of the finances of Millennials and fortunately, prospects appear to be good. The latest survey entitled “Money Under 35” showed the financial position of those between the ages 22 and 35. The finding reveals the following truths about the personal finances of Millennials.
- 9 out of 10 Millennials are saving their money.
- Almost 2 out of 10 are prioritizing their emergency fund.
- 6 out of 10 know their credit score.
- Although majority have student loans, were just as likely to borrow a home loan as those who did not have any college debt.
- The amount of student loan debt that they owe is proportionate to their educational background. It also determines their ability to pay back their student loans. Those having the most trouble in repayment are those who failed to get their degrees or have associate degrees. Those with higher educational attainments are less likely to report that they are having troubles meeting their repayment plans.
- Men tend to earn more than women. Depending on the field of study, the income difference can be as low as 5% or as high as 53%.
- More men have student loans, but women are more likely to have other forms of debt like credit card debt, auto loans, and mortgage.
Tips for Millennials who want to maximize their financial growth
While it appears that Millennials are more in control of their personal finances, that does not mean they are above getting some sound financial advice. Here are a couple of tips that they should look into to help them improve their financial position further. Start saving for retirement. Saving for your future is never a bad thing. After all, this is something that you will benefit and nobody else. You have to understand that saving early for retirement will not only secure your future but will also make the task easier. When you start contributing towards your retirement fund early, you are not required to make a big monthly contribution. A study published on CNBC.com, Millennials have reportedly set unrealistic retirement goals. Some of them think that they only need $36,000 a year to survive. This conclusion may be premature because you need to take into consideration the inflation rate and how it will make the cost of living rise by the time the Millennials retire. The unrealistic goals may be their way of justifying postponing their retirement contributions. Pay off your student loans aggressively. Although we mentioned that student loans help Millennials earn more, it is still something that they should take seriously. Pay it off as soon as you can. If possible, live a frugal life so you can increase the monthly contributions towards your student loans. The more you contribute towards your loans, the faster you can pay it off. This will help you save on the interest in the long run. Save up for your emergency fund. Another thing that you need to work on is your emergency fund. You need to prepare for the unexpected expenses. You may feel like you are invincible at the moment because of your youth, but that will not last long. Soon you will realize just how fragile your situation can be. The only way that you can make your finances secure is by building up your emergency funds. This will allow you to avoid debt. When something unexpected happens, you do not have to borrow money to get yourself out of it. Invest your money. Finally, you want to use a portion of your money for investments. Your savings may keep you secure, but it is not enough to grow your personal finances. You need to put some of your money in investments so it can earn you more money. The gains from investments will be much more compared to the interest that your savings will ever get you. If your finances are not enough, you can concentrate on your emergency funds first but after having an adequate amount, you need to start investing immediately. Take note that this should be separate from your retirement funds.