Giving Millennials common financial tips is nothing new. For some reason, everyone thinks that they are in a financial mess and they need all the help and advice they can get. While we all need an advice every now and then, we might be making the wrong assumptions when it comes to what Millennials really need.
That does not mean Millennials are not struggling with their finances. Statistics reveal that at least half of them admit that their financial stress is affecting their health and relationships. These Millennials graduated while the economy was in chaos because of the Great Recession. It was hard to find a job. Not only that, they graduated with a lot of student loan debts. Simply put, their financial situation after college was not strong and they had a lot of catching up to do. While there are common financial tips that are usually thrown at them, some of them may not specifically be applicable to them.
When you are young and you are trying to prove yourself, it can be frustrating when you do not have the resources that you need to make your dreams happen. The disappointment and frustrations can make you jaded and eat at your confidence. When confidence is gone, it becomes a real struggle to improve your financial situation.
But if then again, if you are getting the right financial advice, things would be easier to overcome. Of course, the key word here is getting the “right” advice. If not, then Millennials might end up making their situation worse.
3 common financial tips for Millennials
We do not want to paint our society as a very materialistic one but this is the reality that we have to face. We live in a consumerist society and it is a fact that we need money to buy the things that we need to survive. If Millennials cannot put their financial situation in order, it will be very difficult for them to achieve financial success.
Obviously, to improve on something, you have to start learning how. But the reality is, Millennials have a limited personal finance knowledge. What should have been taught in school are learned out in the real world. Millennials had to rely on trial and error – which made it harder for them to take a step forward.
To make matters worse, a lot of the common financial tips given to them are not suited for what they need. That is not to say that these tips are wrong. They actually make sense – but maybe they are not specifically intended for Millennials. It might be best to go through these tips that may be pushing this particular generation in the wrong direction.
Tip 1: Save for retirement immediately
This advice does not seem so bad, right? Because of the compound interest, it is usually a good idea to start saving for retirement as soon as possible. But when you are a Millennial – you need to consider your current finances first. Which brings us to the perfect financial advice for Millennials.
Financial tip for Millennials: Save for retirement, but prioritize your debts
If you have a lot of student loans, like a lot of young adults in your generation, then it might be a good idea to deal with that first. Do the math and see where you can save the most. If you do not have to worry about prepayment penalties, then put more money towards your student loans. This way, you can pay off the debt faster. If it will only take less than 5 years to completely pay off your student loan, then you can delay your retirement contributions. If that is not something that you are comfortable with, you can settle for the minimum contribution for now. Once you have paid off your student loans, you can be more aggressive in your contributions.
Tip 2: Use credit cards to build your credit report
Here is another one of the common financial tips given to Millennials. If you consider this advice, there is really nothing wrong with it as well. You do need to build a good credit score and that means having an entry in your credit report that you are actually using debt, to begin with. The best way to do this is to use a credit card. Of course, your student loans would already be there – but having variety is usually a great way to bring your credit score up a lot faster. But then again, like the first financial tip, this is not the complete advice that Millennials should receive.
Financial tip for Millennials: Learn how to use credit cards properly
There is nothing wrong with using credit cards – but make sure you learn how to use it properly. A credit card is not an extension of your wallet. If that is your mindset, then using a credit card will become stressful in the long run. If you want to use a credit card to your advantage, you have to understand how to use it properly. You need to limit its use and make sure that you can pay the balance in full once the billing statement arrives. A credit card can be a great back up but it should never be abused. Otherwise, it might end up pulling your financial position down.
Tip 3: Stay with your parents if you have a lot of debts
A lot of new graduates are actually doing this. They do not leave their folks immediately. They tend to stay with their parents to lower their cost of living. According to the tip, you have to swallow your pride and stay with your parents if you have a lot of debts. But like the other common financial tips, this is not specific to Millennials. It is not wrong, but it is incomplete.
Financial tip for Millennials: Stay with your parents until you have a stronger financial foundation
It doesn’t matter if you have a huge debt or not. You should stay with your folks to strengthen your finances – period. It may be to help you pay off your debt, but the bottom line is to make sure your finances are stronger when you leave. This means making a conscious effort to build a stronger financial foundation. It is not just about saving money. You should also learn the right habits that will help keep your finances strong and secure too.
Millennial traits that make them great personal finance managers
While Millennials may be in most need of the common financial tips, that doesn’t mean they are completely hopeless. In fact, they possess a lot of positive traits that will make them great financial managers. As long as they understand what needs to be done, they have the right traits that will help them be financially successful.
It is not surprising that generations differ from each other. After all, we grew up under different circumstances. Not only that, we were brought up differently. There are so many factors that make us unique from the generations before us and those that come after us.
For Millennials, their uniqueness gave them the perfect traits that will pave the way towards financial success. Here are some of the great traits that will make this happen.
They are motivated
Millennials are the most educated among all the other generations – at least for now. However, they are also the ones with the most debt. If that is not bad enough, they have struggled with poverty and unemployment – probably more than the Baby Boomers and Gen Xers. Since all of these happened at a young age, Millennials do not know any better. Since they had no choice but to find work, they had to hit the ground running. It made them motivated to become really hard workers from the very beginning. Since it is not easy to improve your finances, staying motivated can be a great trait to have.
They have been forced to be financially frugal
Again, their circumstances have forced them to live a frugal life. They had limited resources and even fewer choices to earn more. This forced them to make do with what they have. When you are trying to build your financial position you need all the extra money that you can get. To maximize the extra money from your budget, you want to effectively apply a frugal lifestyle. This does not mean you will deprive yourself of the finer things in life. You just have to define your priorities and focus on financing those. Any unnecessary expense should not have room in your budget.
They are innovative
Millennials are also very innovative. You can blame the digital age for this. They do not know life without computers and the Internet. While it may not be obvious, the constant need for technology makes them very innovative. This gives them a mindset of finding technological solutions for any obstacle that they will encounter – including financial difficulties.
They want to collaborate
Finally, Millennials are more open to collaborating. They like to work with others rather than on their own. This is great for building your finances because you will need all the help you can get to improve your financial position. When you involve others, you get a lot of eyes, ears, and minds. They could find problems that you failed to recognize. In the end, this can help you identify the issues that are keeping you from being financially successful.