Last Updated on January 23, 2020
Finances the Number One Stressor
Millennials want to improve their finances but many don’t know how. In this article, we explain how younger generations (millennials and Gen Zers) can take back control of their financial state.
Number One Stressor
What would you say is the number one cause of stress in your life? If your answer is finances, then you’re not alone. According to a recent CreditWise survey recently released by Capital One, most individuals say that their financial state stresses them more than politics, work and their family life.
The CreditWise survey was in connection with the National Get Smart About Credit Day, which takes place annually on the third Thursday of October. The CreditWise group consisted of Baby Boomers, Generation Xers, Millennials and Gen Zers. As it turns out (perhaps as no surprise), the younger generations are more concerned about their finances.
Respondents Are Hopeful
While Millennials and Gen Zers are more stressed about their financial state than the older generations surveyed, a good percentage of the respondents (approximately 42%) said they expect their finances to look up in the near future, according to a CNBC article. Despite their wishful thinking, only 16% know how to improve their credit score, while the majority is left in the dark. However, more than half of the respondents (59%) who don’t know how to improve their finances, including their credit score, are willing to learn.
It’s easy for Millennials and Gen Zers to improve their finances, as it takes a few small sacrifices to achieve their goals. The first step, however, is to create a goal.
Set a Realistic Goal
The first step to create a realistic goal is to make sure your goal is specific. “I want to improve my credit score” isn’t going to cut it. Instead, say to yourself: “I want to improve my credit score by ___ points in ___ months.” This is where keeping track of your expenses really comes in handy. What’s coming in, and what’s going out? If your goal is realistic, how much you have to save in order to achieve that goal?
And don’t forget about your long-term goals. Some experts say to begin with the long-term goals first (where do you want to be in five-ten years?) and work your way toward the present day (where do you want to be in one year?). But if that seems too overwhelming, make specific short-term goals first and then work your way towards the long-term goals.
Make Financial Cuts
Cut costs wherever you can. One great way to do this is by starting with your car insurance. Can you make that bill smaller? Very possible, but first you need to shop around for the best deals if you didn’t when you originally purchased your car insurance. This is a huge bill (yes, necessary) that has the potential of being significantly reduced through company comparisons.
You may also be able to reduce your credit card interest rate if you ask politely and your account is in good standing. If a representative does not have the authority to assist you, ask to speak to a supervisor about reducing your interest rates. But if that does not work, shop around for credit cards with much lower interest rates.
Eliminate Unnecessary Expenses
After you have thoroughly gone through your bills, you may notice that you are making payments that are no longer useful to you. For example, perhaps you’re paying Amazon Prime and Pandora – eliminate Pandora and use Amazon’s music app. Or, you may be spending too much on lunch. Instead of going out for lunch everyday, go out once a week. For the rest of the week, bring a lunch from home.
Fund Your Future
If you’re a Millennial or Gen Zer, planning for your retirement may not be your first priority. While it doesn’t have to be your first, it should be a priority. If you don’t have access to a work-sponsored retirement plan, like a 401(k), you can set up an IRA or Roth IRA. Or you can establish a Self-Directed IRA, which is essentially a traditional IRA but allows you to make alternative asset investments, like real estate, cryptocurrency, and so much more. You can read the IRA Financial info kit for the Self-Directed IRA to help you get started.
These are just a few ways Millennials can improve their finances, as well as Gen Zers. One of the best pieces of advice to be offered is to learn as much about finances, budgeting, retirement tools and saving tools to set you on the right path. You should also learn about investments, especially if you establish a Self-Directed IRA, which gives you a world of investment opportunities, even socially responsible investments. Education is a great place to start when improving your finances.