Are you in a financial mess? You and the multitude of Millennials are in the same predicament. Although the financial problems, amplified by the recent recession, affected consumers of all ages, it is the Millennials that seem to be far from recovering.
The Baby Boomers used to be in the headlines because of the discouraging retirement statistics. But that generation have long been replaced by the younger ones who are struggling with the ever increasing student loan crisis. The Millennials seem to have it so bad because while the mortgage and credit card debts are also increasing, the delinquency rate is not. With student debt, the delinquency rate is still rising. And that is not stopping lender from issuing more students loans to incoming college students.
Millennials and their money woes
We need to start paying close watch on the predicament of the young adults because if they continue on this path, it might prove to be disastrous for the country. After all, they will be taking over the nation soon enough and with the way they are handling their finances, things are not looking too great.
Here are two insights that you need to know about the financial mess that Millennials are in.
They are more economically in trouble.
During the economic collapse, the Millennials were the ones who have just entered the corporate world. Just as they got out of college, the job market became tough. Their lack of experience left them with few choices that they had to settle for what was available. Some of them were not even enough to cover the student loans that they have. According to the Employee Financial Wellness Survey 2014 from PWC.com, the wellbeing of Baby Boomers and Gen X is improving while the Millennials are not. In fact, the latter is struggling to get out of their debt situation and to save for their retirement. The older generations can meet their monthly expenses while the younger ones have a hard time trying to cope. For other debt types, the Millennials are also struggling with their credit card payments even as the other generations are improving their credit payments.
The survey from the PEWSocialTrends.org show a similar description of the financial plight of this younger generation. The combination of their student loans and unemployment caused them to live in poverty. They lose the opportunity to grow their wealth because of these financial difficulties. Based on the data from this report, even the older generation think that Millennials really had it tough compared to what they experienced after college.
They score low in financial literacy.
In another study, FINRA.org revealed that in their financial literacy quiz, only 24% were able to give 4-5 correct answers (out of a 5 question survey). For those aged 18-26 years old, only 18% had the same answer.
Despite the high levels of debt, they are the ones who seem to lack the knowledge about how they will solve the financial mess that they are in. This is probably why the student loan delinquency rate is steadily rising. Not only are they unable to get themselves out of debt, they seem to be approaching the wrong financial sources for help. A lot of the Millennials have admitted to using pawnshops and payday lending at some point. We all know that these, especially the latter, is not the best way to get financial aid.
With the economic difficulties of Millennials and their lack of knowledge to solve it, you will really doubt how they will get themselves out of this financial mess.
What can you do to get out of a financial crisis
In case you are a part of the Millennial generation and you can relate to the difficulties that they are experiencing, then you should start working on improving your financial situation. Here are 4 things that you should do when you want to get out of the financial mess that you are in.
Deal with debt. The first task that you need to do is to look at your debt and deal with it. If you choose to ignore it, that will not go away. You will only prolong the agony. What you should do is to compute how much you owe, research your options to get out of it and do what is instructed. Dealing with debt will serve as a realization of what you did wrong in the past. It will help you contemplate on how you should start acting now in order to keep yourself from another debt situation. Unless you solve your debt troubles, you will remain in a financial mess.
Boost your savings. Another thing that you need to act upon is your savings. You need to learn how to commit to saving money so that you can use it to invest and grow your personal net worth. Look to a place to securely store your money so while you are growing it, the interest will add more into it. If you do not have a checking account because of a bad history, try to look for the “second chance” bank accounts that are offered by credit unions and selected banks. You can expect that these will charge higher fees and impose higher limits but it should give you another chance to rebuild your savings in a secure place.
Improve your credit report. Since your financial mess probably destroyed your credit score, one of the tasks before you involves fixing your credit report. Try to get a secured credit card and use it more wisely now. Whatever you spend on it must be paid immediately to avoid paying interest and finance charges on it. This should be a great way for you to prepare for future expenses like buying a home or something similar. A good credit score will allow you to get a low interest loan and thus keep your payments low.
Secure your future. Lastly, you may want to start working on financial security as you slowly but surely make your way out of the financial mess that you are in. there are two ways to do this. The first is to build up an emergency cash fund that will keep you from the need to put yourself in debt again. The second involves your retirement fund. There are habits that will threaten your future’s financial security and ignoring these two is one of them.
In the end, you know that it all boils down to how much you understand your financial choices. Whatever financial difficulty you are having, you can always trace it back to a wrong decision in the past. It is all about your choices. Even if the economy is in a bad situation as long as you make the right choices, then it will serve you well. Even if you are well informed or if you have a 6 figure income, if you make the wrong choices about your money, you will encounter troubles soon enough. There is always a source and in some cases, even those who “should have known better” land themselves in a financial mess. In an article found on LearnVest.com, you will read the story of a financial planner who, despite giving a lot of financial advice, chose not to follow the rules. In the end, she ended up in a lot of debt. So it is not really about what you know. It is more of how committed you are with making the right financial choices to get yourself out of a financial mess.
