Posted by US News on November 5, 2014 by Kimberly Palmer
These five ideas will help millennials get on track.
Millennials are growing up: The oldest of the cohort are approaching their mid-30s, which often coincides with more adult financial responsibilities, including mortgage payments and family-related costs. They have more grown-up challenges, too, like paying off debt and saving for retirement and future college tuition payments for children.
The good news is that the financial services industry wants to help. Eager for younger customers’ business, the financial industry has been busy analyzing millennials’ money challenges and trying to figure out how they can best reach out to them. As a result, a handful of financial services companies recently released money tips for millennials. Here are five of the best ones:
Save like it’s 2009. Savings rates tend to go up during recessions, which is why personal savings rates shot up in 2009. The fear of financial instability appears to motivate people to squirrel more money into the safety of bank accounts rather than squander it on new shoes or a new smartphone. Millennials could use some of that motivation, since many have yet to start padding their bank accounts or saving for retirement.
A 2014 Wells Fargo Millennial Study of 1,639 millennials found that 55 percent said they have already started saving for retirement, and those who haven’t yet say they think they will begin at age 35. Women millennials were particularly behind the savings game, with millennial men having accumulated almost twice as much as their female peers.
Four out of 10 millennials in the survey said debt was their top concern, with about half reporting 50 percent or more of their income goes toward paying off their debt. In addition, 56 percent said they are living paycheck to paycheck and simply don’t have the money to start saving for retirement or other goals. (Financial advisors generally recommend saving between 10 and 20 percent of your income over your working years, with the goal of replacing 80 percent of your income during retirement.)
Karen Wimbish, director of retail retirement at Wells Fargo, urges millennials to get started with saving as soon as possible in order to benefit from compounding interest. Having more money in the bank, she says, can also provide a confidence boost when it comes to achieving long-term goals. She notes that many millennials are aware of the fact that they should start saving as soon as possible, but they still find it hard to do so.