Millennials are talked about ad nauseum in our society. Whether it’s a conversation between Baby Boomers or an article stating a new finding that supposedly comprises the entire generation, the chatter is ongoing.
While not everything we hear about the Millennial generation is negative, the bad (snowflakes, everybody-gets-a-trophy generation, non-existent attention spans) often seems to outweigh the good (interest in experiencing other cultures, need for meaning in work, care for the environment, the general need for more autonomy and freedom in life).
None of these stereotypes hold true for every person in a generation of over 75 million. However, one thing that can’t be denied is that it’s never been more financially challenging to be a young person.
Among the rising costs of living in U.S. cities, exponential growth in the cost of a college education, and the gradual swapping of secure jobs for gig-economy wages, the buying power for young people just isn’t what it used to be.
But there’s little use in letting these facts keep anyone from building wealth. Stretch the value of your dollar and bolster your long-term financial outlook with these money-management tips.
Automate Your Financial Life
Finance isn’t the most exciting topic in the world for most people. So, it makes sense that a lot of young people don’t want to get in the weeds with nuanced strategies. There’s a big difference between dedicating time to following certain best practices and putting safeguards in place. Most millennials are tech-savvy, but that doesn’t mean they’re using it to streamline their goals. Sit down one time and set automated transactions for your various needs, from bills and debt to savings and retirement — you don’t need to spend time each week maintaining your finances.
Do the Math on Student Loans
According to NPR, student loan debt has more than doubled in size over the past decade to reach $1.5 trillion. Consequently, Millennials are delaying buying homes, getting married, and having children.
No amount of planning will make exorbitant debt disappear, but it’s worthwhile to consider options that can lighten the weight of the loan. Doing so could free up money that can be used for savings or other debt.
First, tally exactly how much you owe. If you have federal loans, there’s no getting out of it, so you may as well know the road ahead. If you’re not earning much money, look into an income-driven repayment plan. If you’re in the midst of some type of hardship, see if you qualify for deferment, which freezes your payments and interest. If that doesn’t work, then forbearance also halts your payments, but the interest still accrues.
Figure Out What’s Keeping You from Getting Ahead
Paying bills and student loans might be a drag, but they’re necessary. What’s not necessary is buying lunch at work every day or splurging on entertainment every single weekend. These money-sucks might not apply to you, but chances are you have your own financial kryptonite. If it’s not already glaringly apparent, expense tracker apps like Clarity Money analyze transactions and suggest areas to cut down on (e.g. eating out) or eliminate altogether (e.g. that unused gym membership).
Put Your Money in the Stock Market
According to a Bankrate survey though, less than one-quarter of Millennials think investing in the stock market is the best way to store money long-term, instead preferring cash, real estate, gold and bitcoin. The stock market may seem erratic and hard to predict at times, but historically, it’s one of the safer long-term investments we can make. What’s more, today’s technology sidesteps the need for financial advisors and allows anyone to get into the market. Platforms like M1 give investors a way to own any stock or fund they desire, even if the share price is more than they can afford. If you want to buy Amazon for $10, you can. Even better, you can build custom pies of different shares and funds to diversify your risk level.
The goal with managing money better shouldn’t be to spend more time thinking about it, Rather, all you need to do is get a handle on your situation, decide how you’ll divvy your paycheck, identify the spending areas that are hurting you, and give your money time to grow in the stock market. These are the pillars to effective money management as a 20-something. Establish them and add to the structure over time as you see fit.