Millennials do not have a reputation for having great financial habits. In fact, people have been going on about how this specific generation might never recover from the Great Recession. Let us break down what this generation had to go through.
First of all, they had a lot of debt to deal with after college. But that should be alright if their education can help them get a job, right? Well, with the Great Recession happening, the job market was not a friendly and welcoming place for the new graduates. With fewer job opportunities and a lot of debt, it is not surprising that they were forced to delay a lot of investments. In fact, by 2016, only 4 out of 10 Millennials have bought homes – which is quite lower than expected.
As you can see, it does not seem like things will be handed to Millennials on a silver platter. If they expected help from their parents, they should just give up on that hope because the Gen Xers are also struggling with their own financial troubles – especially with their retirement creeping up on them. Their grandparents, the Baby Boomers, are also not exempt from the financial crisis, since they only have a little time to salvage what they can before they retire.
Obviously, Millennials have to pick up the pieces themselves. This is why they need as many financial tips as they can get. But are they as hopeless as we all think? Apparently, they are doing a lot better now.
What financial habits are Millennials doing?
We all know that it is the difficult times in life that teaches us the best lessons. This is probably why it should not surprise us that Millennials ended up having great financial habits. While they are still a work in progress, it is evident that worrying over them is really unnecessary.
According to a recent survey, Millennials are displaying better money habits. This particular report from the Bank of America showed a lot about the financial situation of this generation, especially in comparison to the others like the Gen Z, Gen X, and Baby Boomers. Among all the information that you will get there, you will notice that Millennials seem to be getting a hang of some great financial habits. The report showed both positive and negative traits of this generation but the ones that should be applauded are three specific habits.
First of all, Millennials are showing signs of budgeting. Not that there were signs that they did not do it before. But apparently, 54% of Millennials are actively budgeting. And of that number, 73% of them are serious enough to stick to their budget each month.
We all know that budgeting is the best thing that you can do to be successful at managing your finances. It is the best tool that will help you stay in full control of your finances. A budget plan shows your income and the various expenses that it is funding. It will tell you if you are overspending on one category or if you are not spending enough on another. With the details that a budget plan provides, you can make smarter decisions in every aspect of your finances. This is why it is one of the great financial habits that you should learn and apply in your life.
The next financial habit that Millennials are doing is saving. Apparently, 47% of them have $15,000 or more in their savings account – which is an increase from 33% in 2015. Not only that, 16% of them have $100,000 or more saved. This is another increase from the 8% in 2015. When it comes to what they are saving for, Millennials sure know what you prioritize. 64% save for emergency funds, 49% save for retirement, and 33% save to buy a house. What is great about this is that Millennials are really serious about their saving efforts. In fact, they think so highly about saving that 35% of them feel stressed if they think they are not saving enough.
The thing about saving is that it is a great way for you to improve your finances. When you spend, that money is gone. When you save, it stays with you. That extra money that you are putting away will give you the resources to increase your personal net worth. You can use it to invest or to buy something that will hopefully make you earn more money.
Finally, one of the great financial habits that Millennials are applying is setting up saving goals. According to the report, 56% of Millennials have saving goals and 67% of them stick to it every month. It is great to know that not only are Millennials setting saving goals, they are managing the long-term goals just fine.
Knowing how to set goals is a great way for you to keep your finances moving forward. These goals will serve as your targets in the future – giving you something to look forward to. Not only that, it can effectively motivate you to make the best decisions when it comes to your money. Setting these saving goals are easy. You just have to think about what you want to happen in your future. What do you dream to have? These can be a part of your saving goals.
Why Millennials are capable of being a financial success
After worrying about Millennials, it was evident that they did not need all of it. They have great financial habits and it seems like they know what they are doing. Although they entered the workforce with a lot of debt, it did not matter. The circumstances that were thrown their way gave them what they need to become a financial success.
They had to learn the hard way
Millennials did not have it easy. If you think about it, they were forced to hit the ground running right after they got their degree. Before the Great Recession, they were given promises of high-paying careers. This is what convinced them to borrow a lot of money. However, after they graduated, they were thrust into an economy that is struggling to survive. A high unemployment rate left a lot of them with low-paying jobs that cannot afford to pay back their student loans. This is what fueled a lot of reports that the impact of the Great Recession has influenced Millennials in so many ways. It affected how they spent their money. In a way, it made them cautious spenders. And that is always a great financial habit to have. Although it turned them into low-risk investors, it still gave them a lot of lessons to live by.
They have the habits that will fuel their success
Although Millennials have a low-risk tolerance, it should not be a cause for concern. After all, they have great financial habits that will fuel their success. They have the basics down – budgeting, saving, and having goals. When combined, it is enough to make them feel financially secure because they are in full control of their finances, they have extra money, and they have goals to motivate them. The report from the Bank of America mentioned that 59% of Millennials are feeling secure about their finances. They feel this financial security even as they pay off their debts. If this is not leading them towards financial success, then nothing will.
They are educated
While their education resulted in a lot of student loans, it gave them the confidence they need to demand a higher salary. In fact, the reports reveal that 8 out of 10 Millennials who asked for a raise got one. Not only that, 46% of Millennials asked for a raise in the past two years. This is higher than the 36% of Gen X and 39% of Baby Boomers who did the same. This education is what helps this generation make better decisions. Couple that with what they had to overcome during and after the Great Recession, then you know that they are meant to be financially successful. You may want to copy these great financial habits so you can also find your way towards financial success.