Solutions for Millennials With Personal Finance Problems

For every problem there lies a solution, and personal finance challenges for millennials are no exception. Millennials make up the generation of people born roughly between 1981 and 1996. As of this writing, millennials are currently between the ages of 23 and 38 years old. Unlike young adults in this age range from say, The Silent Generation (born 1928-1935), millennials have far more complex financial issues to address on a daily basis.

For starters, they were born into a totally different world than their early 20th century counterparts. They deal with more pressure and greater responsibilities at earlier ages than ever before in history. Today’s millennials need solutions for personal finance problems for the fast-paced technological world in which they live. Compared to people their age 80 years ago, millennials deal with far more student loan debt, retirement savings concerns, child care costs, and other personal finance matters. 

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Retirement Savings? I’m Only 25!

Time flies by quickly; retirement will sneak up in a flash. What’s a young adult to do to maintain a home, family-and maybe just a little bit of fun in life, and also plan for a scenario that is decades away? The hair on their heads isn’t fully grey yet-how can they prevent speeding up the process due to worrying about how to save for retirement? Below are some retirement savings hacks for smart millennials who plan ahead.

Gone are the days when young adults had the luxury of believing that they would never grow old and that retirement was an “old head” matter. Today, millennials join older adults in the need to prepare for the days when they retire. However, unlike people in their 50’s and 60’s, millions of millennials are still paying the costs for child care, student loans, and a long list of personal money issues shared by others in their age group.

1. Millennials can take full advantage of their employer’s 401(k) match by increasing the typical 3 percent they take with auto enrollment to as little as 1%. Once the employer matches the percentage, savings add up without the employee even missing the one percent from the paycheck.

2. Experts say that saving 15 percent of gross income is a good figure to shoot for in retirement savings. This might bring a “not gonna happen” reaction to millennials with houses full of spouses, babies, and bills. But the goal is easier to meet if the saver considers that this includes employee contribution. So, if the company pitches in 5%, all the individual needs to add is 10 percent!

3. Individuals can also consider taking one for the team by compromising with how raises or unexpected bonuses are spent. For example, planning a road trip for a vacation rather than flying to a distant location. The money saved can be put aside for retirement. The exotic vacations can be taken after retirement when the kids have long left the nest. 

4. The majority of traditional retirement accounts (IRA’s and 401(k’s) provide tax deductions for contributions. However, when the funds are withdrawn in retirement, they will be taxed at the current income tax rate. A smart personal finance move is to contribute or convert funds to a Roth 401(k) or Roth IRA and get tax-free retirement income.

If learning how to save money brings a smile to your face then you’ll be grinning ear to ear if you read our Complete Guide to Saving Money (and making a little more).

I Graduated College and All I Got Was This Student Loan Debt

Student loan debt is among the top personal finance dilemmas that cause concern for millennials. By some accounts, student loan debt is more problematic than paying auto loans, mortgages, and credit card balances. Faced with ever-increasing costs for college tuition, a large number of millennials must take out student loans that they have trouble paying once they graduate. More often than not, right after finishing college their career is in the fledgling stage-with a paycheck to match.

There is no escaping repayment of government education loans in the United States-even a desperate attempt to get out from under by filing bankruptcy won’t work (they are exempt). Bankruptcy on student loans is possible in Canada under the Bankruptcy and Insolvency Act. However, certain restrictions apply such as the borrower must be out of school for seven years. The much wiser solution is to investigate ways to take some of the sting out of student loan payments, such as:

• U.S. Federal student loan recipients are automatically placed into a standard repayment plan upon graduation. The payments are fixed over 10 years with high monthly payments. Millennials should apply for one of four repayment plans which are based upon income, which means lower payments.

• Hundreds of genuine student loan repayment help programs are available to U.S. college graduates. Approval for assistance is based upon the graduate’s state of residence and occupation, among other factors.

• Loan consolidation can be a money-saving move for students with multiple loans. If you’ve been thinking about debt consolidation, here’s all of the information you need to make a decision: https://smarter.loans/debt-consolidation-loans/

• In Canada, interest relief is an option for low income grads.

• Canadians can also get payments suspended in 6-months blocks, depending on income. The government pays the interest during the suspension.

• Loan forgiveness is offered to graduates that meet certain criteria, including students with disabilities.

Didn’t See That Coming: Saving for Emergencies

Maintaining an emergency savings stash isn’t just a personal finance problem for millennials. Some financial experts estimate that half of Americans have a balance of $1000 or less in a savings account. That’s not counting the sea of people who have not a thin dime in a piggy bank, let alone a savings account. And then it happens. The car breaks down, the roof leaks, or another unanticipated money crisis develops. Managing personal finances in order to put aside money for emergencies includes:

1. Revamping the budget to include savings as a priority, even if it means sacrificing non-necessities. 

2. Working hard to get credit as squeaky clean as possible to save money on interest and fees.

3. Setting a 5 to 10-year goal to pay off as much unsecured credit as possible. This eliminates making payments on old credit later, freeing up cash to put away for retirement.

4. Transferring any money left in the checking account at the end of the month to the emergency savings account.

5. With the exception of severe crisis, millennials should learn to say “no” to requests from friends and family to borrow money. Nine times out of ten they don’t get the money back in full. The same goes for being the one to always pay for everyone else’s dinner and drinks. Both are nice gestures, but don’t improve personal finances one iota.

It’s a Wrap

One thing is guaranteed-any millennial with personal finance problems is never alone in their plight. Out of the 70-plus million millennials in the world, the majority would say they are concerned with some area involving fiscal matters. Which is not surprising, considering they deal with balancing lives that include education, employment, family, and countless other responsibilities.

One huge advantage that millennials have today is access to technology and the skills to use it effectively. Information on any topic can be researched lightning fast, including resources for managing finances. That, along with taking advice from people in the know, goes a long way toward easing financial stress. The responsible 21st century millennial is serious about making intelligent personal finance decisions that create a sound foundation on which to build assets and prepare for the future. After all is said and done, shouldn’t that be the goal for people from all generations?

If you want to build a sound financial future with good credit, here’s how: https://smarter.loans/credit-building-loans/