So hard yet so true: we might not be as financially literate as we think. Did you know that only 1 out of 5 millennials demonstrates basic financial literacy? Despite being better educated and more economically active than our parents, Americans born between the early the 80s and 90s confront greater difficulties when it comes to money. The financial challenges millennials face could prove to be a dire situation if not addressed. And despite there now being available a plethora of money tips for millennials, through non-profit blogs, free online classes for personal finance, knowledgeable bloggers that share great financial advice, and other sources, the issue persists.
According to a survey conducted by PwC, we have inadequate financial knowledge in regards to stuff like the stock market, mortgages or retirement. And as a generation carrying new personal financial responsibility, it’s critically important for us to be on a path leading towards financial security.
Here are the 4 biggest financial obstacles millennials have to face:
1. Making enough money
We spend around 40 hours a week at our full-time job. And still, we state that one of our biggest financial worries is not making enough money. This gets us thinking: is our job taking us where we want to be? If the answer is no, we should seek out other career opportunities.
As entrepreneur and GOBankingRates Best Money Expert Josh Felber said, “it’s time to take action, start investing in ourselves to grow and begin to add multiple streams of income.”
2. Staying on a budget
Old-school personal finance advice tells us that if we just create budgets and stick to them, then poof!, all our money problems will be solved. But anyone who has ever tried budgeting knows it doesn’t work that way.
If you’re part of the percentage that follows a budget – keep it up. But if you’re among one third of the young people who are still not familiar with the B word, it’s time to get smart. Check out this article on how to budget the non-boring way and get started.
3. Managing debt
Due to the cost of university tuition, we millennials are entering adulthood with more student loan debt than any generation before us. When it comes to millennials and money management — growing debt is seems to be the main concern for this demographic. Not only does loan debt sap our bank accounts but it also hinders us seizing opportunities and moving forward in our life.
Achieving financial (and other) goals like starting a business, buying a big purchase or getting married is even more complicated if we don’t break up with debt first.
4. Developing a financial plan
As we have noticed, the problems that millennials face are many. As such, developing a financial plan should be the first step. Needless to say, having a plan sounds simple, but a goal without a plan is just a wish. Robert Kiyosaki, the best-selling author of the Rich Dad, Poor Dad book, explains why millennials can never be too prepared when planning their finances:
“Having contingency plans makes us feel less vulnerable and exposed if we find ourselves facing a setback. This preparation would include cash reserves, in the event of job loss or a decrease in income, as well as a Plan B. That Plan B could be a part-time business that supplements income from a full-time job to help create a cushion in the event of unplanned expenses or any type of financial setback.”
Bringing it all together
Lack of basic money concepts may jeopardize our financial success. The financial challenges facing millennials is something that needs to be acknowledged as well as addressed. Starting seems to be the hardest part – but taking control of our finances will give us a solid base from which to make life’s important decisions.
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