Born between 1981 and 1996, millennials are the tech-savvy generation that’s pursuing their dreams, but also shouldering a number of financial burdens that generations before them didn’t have to handle. Largely due to growing up and entering the workforce during the Great Recession, their financial challenges are unique, to say the least.
Student Loan Hero reports that millennials benefited from a 67% rise in wages since the 1970s, but the increase is not enough to keep up with the huge inflation in living costs. Not to mention the other factors like the rise in college tuition and housing market. We’ve found 3 major financial problems millennials face today. Here’s a breakdown of them and ways to overcome them.
Student loan debt – College tuition has more than doubled since the 1980s with the average student debt per graduate at $17,126 according to Business Insider. In order to overcome student loan debt, you have to first understand it. Take some time to look at all of your loans – the principal and interest – to understand just how much you truly have and the details of the debt. It can be difficult to digest just how much you owe, but with this clarity, you can come up with a game plan that will work for you.
Are any of them eligible for the income-based repayment plan? What is the interest rate for each of them? Understanding this will help you to determine which one to put more money towards or if you should consolidate. Even if it’s just $5, $10, or $15 in addition to the minimum monthly payment, it can go far in the long run. If you find that you can’t meet the minimum monthly payments, consider these tips on how to lower monthly debt payments. There is a light at the end of this student loan debt tunnel. Our Member Advisers are here to help you understand the right steps to take that could work for you.
Purchasing a Home – If you have been wanting to purchase a home, but your goal of saving for a down payment seems impossible to reach, you are not alone. It is taking longer for millennials to save for a home as home prices are beginning to climb. On average, millennials will pay 39% more than baby boomers who bought their first home in the 1980s, according to Student Loan Hero.
Don’t assume you can’t afford a home just by looking at the price tags. Our Member Advisors could help you paint a realistic picture of your finances and weighing your options for the best ways to save for a down payment on a home.
Millennials will need to save more for retirement. $1 million is no longer what it used to be. In 40 years (around the time millennials will be retiring or in retirement), $1 million in savings would have the same spending power as $306,000 today. Prepare yourself now with options like an employee-based 401(k) or an IRA. While it’s never too late to start saving, the sooner you can save the better. And depending on the type of retirement you’re envisioning, investing might also be a good option to help your money go even further. Once you’ve sat down with one of our member advisors and devised a plan, stick to it as much as possible. Avoid having to dig into your 401(k), IRA or investments with an emergency plan.
The most important thing regarding any financial hurdles you encounter is, to be honest about your spending. It can only help you better understand how you could reach your financial goals of retirement, purchasing your dream home, and living debt-free.
Are you ready to face your financial challenges head-on and walk tall with a game plan to overcome them? Connect with one of our Member Advisors today in our Montebello or Cerritos branch.