7 steps to help millennials boost their financial well-being - KTTC Rochester, Austin, Mason City News, Weather and Sports

7 steps to help millennials boost their financial well-being

Updated: Apr 10, 2016 11:51 AM
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By Andrew Housser

During National Financial Literacy Month in April, it’s hard not to look at the unique challenges millennials face when it comes to managing money. Many in this generation, now in the 16-34 age range, grew up during the Great Recession. They are better educated than any previous generation – and yet have poor financial literacy. A recent study by PricewaterhouseCoopers found that just 24 percent of millennials know even the basics. 

The good news is that for this well-educated and innovative generation, getting smarter about finances is doable. Here are 

seven steps to get started.  

1. Make getting out of debt a priority. More than half of millennials recently have carried over credit card debt from month to month. For these individuals, getting out of debt should be a top priority. The first step is to stop using credit cards, especially for daily expenses. For these, use cash or a debit card, and track all purchases in a check register. When you do use a credit card, limit purchases to one card, and repay that balance in full each month.  

2. Stay on track with student loans. Among millennials, 34 percent of those with a household income of $75,000 or more are worried that they will not be able to repay their student loans. It is important to keep repaying your student loans in a timely manner. Late payments can result in a damaged credit profile. If you cannot pay your loan, or cannot pay the full amount, contact your lender and inquire about payment plan options. But be careful not to extend payment terms for too many years. The sooner you pay off your student loans, the sooner you can move to other life goals, such as buying a home, building a business, starting a family or embarking on other adventures.

3. Pay on time. Another recent study found that millennials frequently pay bills late. Yet on-time payments are the single best way to maintain a good credit score. Take time to set up online bill payment and email notification for all bills, so that you never miss a paper bill due to roommate issues, moving frequently or a busy schedule. It’s also possible to set up automatic payments.

4. Be wary of luxury spending. Many millennials are children of baby boomers, one of the wealthiest American generations. As a result, many grew up with a higher standard of living than previous generations. You may be accustomed to living at your parents’ income level, but find that your paycheck may not yet be able to keep up. Instead of modeling your parents’ lives, take inspiration from the Greatest Generation, the generation that lived through World War II, who prided themselves on living without debt and finding pleasure in simple things. This might mean driving a used car, living in a less-fashionable area and eating at home more.

5. Do not scrimp when it comes to saving. Begin as early as possible to save for retirement. It is the single best way to secure your future. This is especially true if your employer matches your contributions to a company 401(k) or similar account. In fact, if you do not take advantage of those benefits, you are essentially saying “no thanks” to free money. In addition, make it a priority to save six-nine months’ worth of living expenses. Start small and work up if needed. 

6. Avoid high-interest loans. Many millennials use so-called alternative financial services. These may include payday lenders, pawnshops or rent-to-own services. But this money comes with a high price. Instead, save up for purchases, and use your savings for unexpected and emergency expenses.

7. Get help if you need it. Research also shows that millennials are reluctant to get help with their finances. Yet with low levels of financial knowledge, getting help could be a very smart move. It may be helpful to invest in a few hours of time with a fee-only financial advisor for recommendations for investing and financial planning. If you have debt that you cannot repay, consider getting help from a reputable debt relief company. The American Fair Credit Council can be a good place to start to seek out a reputable provider.

Millennials are known for being creative, laid-back and taking care of themselves. Nowhere is it better to apply those attributes than in managing money. And the sooner you get started, the brighter your future can be.

Andrew Housser is a co-founder and CEO of Bills.com, a free one-stop online portal where consumers can educate themselves about personal finance issues and compare financial products and services. He also is co-CEO of Freedom Financial Network, LLC providing comprehensive consumer credit advocacy and debt relief services. Housser holds a Master of Business Administration degree from Stanford University and Bachelor of Arts degree from Dartmouth College.
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