Millennials are the new generation, the lovers of technology and social media, with a somehow carefree attitude towards life. If you fall between the age of 16 years old (born in 2000) and 36 years old (born in 1980) then you are in the millennial generation. If you look at the age range you notice that millennials include teens who are still in school and even the middle age individuals who are still working. The millennials are an age group that is faced with a lot of decisions regarding their life and future. With these vast decisions being made in this one age group, people find it hard to find the proper definition of a millennial. Life decisions are very important in the life of a millennial. Money is one of the most important decisions a person needs to make with regard to securing their financial future. Fund Administration offers professional advice to everyone, millennials included, when it comes to securing their future through proper investment and money practices.
Just like any other person millennials also have money problems that they have to deal with. Since the age group has a wide age range some of these money problems if not dealt with at an early age can be transferred to the older generation. Experts do agree that one of the universal problems affecting this generation is their lack of wisdom when it comes to handling money. If you are a millennial then you should watch out for these 6 money problems that might be affecting you already.
1. Debt Accumulation
One common trait that most people observe from millennials is that they have a weakness when it comes to debts. Millennials can rack up so many debts without noticing the danger. Since the millennial’s age set has a wide range in terms of age, they are faced with changing lifestyles and hence need to make serious adjustments in their life which require money. Since most of them still haven’t started earning large sums of money, they opt to take debts to buy that expensive car, have their dream wedding or o to those annual vacations overseas. Within a few years, most millennials find themselves in so much debt, in part, says financial planner Castle Wealth Management, because of student loans. The crazy part is that most millennials don’t find it strange taking so many debts, in fact, they see it as progression in life when you have debts to cater to their expensive lifestyle. The other crazy assumption these young people have is that they are young and will have plenty of time to pay for their debts in the future. The sad truth is that more debts will continue delaying your savings and hopefully when you manage to pay the debts you won’t be left bankrupt.
2. Paycheck to paycheck
Many millennials have fallen prey to the habit of living from one paycheck to another. The main contributing factor to this kind of lifestyle that is embraced by millennials is the habit of taking too many debts. The second reason is the rate of unemployment that is experienced among the millennials. They have crazy spending habits that cannot be sustained by the irregular earnings they make. This makes it impossible for them to progress financially. The sad reality is that most millennials enjoy this kind of lifestyle and till they are faced with a situation where they financially set back and are forced to take drastic decisions.
3. Zero or very little savings
Crazy and unrealistic spending habits leave no room for savings. That’s the case with many millennials, they have very little savings or no savings at all. Since they are living from one paycheck to the next, they are no money to save and hence no emergency funds to handle an unexpected crisis. When they are faced with an unexpected crisis, they have no option but to take more debts and hence continue the vicious circle of more debts. A financial crisis can prompt a millennial to open an emergency savings fund that will help them rework their expenses and budget. This money will be able to sort any unexpected financial crisis in the future.
4. Zero attention to retirement planning
Retirement talks tend to be put off by all millennials. To them, retirement feels like decades away and no need to talk about when you are not yet 40. Saving from your retirement needs to start with your first paycheck or you will continue postponing it till it’s too late. The older you get the more expenses you incur and accrue which makes it hard for you to save. The earlier you start saving the more you will accrue from your compound interest. Saving for retirement might not have immediate benefits, but they will guarantee you financial security when you will be old and no longer strong enough to continue working.
5. Insurance covers
Millennials don’t bother about insurance cover, they either get underinsured or totally forgo taking insurance covers. Millennials consider insurance as one of the most boring monthly expenses they have to deal with. That’s why many of them fall into the temptation of lowering their insurance coverage or even cancel it. Insurance and emergency funds do the same job, making sure you are secured when you are faced with any catastrophic circumstance. Insurance covers will not only look after you but also your family during your time of crisis. There are simple insurance covers: life insurance, medical insurance, and motor vehicle insurance covers are some of the must-have insurance covers.
6. Credit Score
A credit score is one crucial aspect of one’s financial profile. The first two money problem that millennials have makes it hard for them to build a good credit score. Racking up debts tens to affect one’s credit score negatively. Most millennials tend to overlook the importance of having a good credit score until they need to take a mortgage loan, or need to take up a loan for a major purchase. Having a low credit score attracts higher interest rates on the loan you are applying for, which in turn leads to more expenses. Worst scenario, you can be denied a loan because you have too many debts and a very low credit score. The other reason why you can have a low credit score is lacking a credit history. Avoiding taking debts can backfire on you when you are trying to take up a loan. The best trick is to take up loans that you can easily repay so that you build a good credit score.