Back to our hot topic - Millennials. What do we do with them now? A new study was released by Northwestern Mutual that finds Millennials are having trouble balancing their long-term finances. The 2017 Planning & Progress Study says overall, 32% of Millennials say they spend their money excessively, 23% of Millennials surveyed also admitted to hiding purchases from a spouse or partner. The study also showed financial planning and decision-making is impacting the emotional health of America’s youth with 23% saying financial anxiety makes them physically ill on a weekly or monthly basis. 24% also say financial anxiety affects their relationships with a spouse or partner regularly. While these percentages are higher than their Baby Boomer and Gen X peers, having anxiety over long term financial planning is not a new concept for anyone. So, now what?
Some people say, which you have probably heard about, that avocado toast is the reason Millennials don’t have any money. What these numbers, and what I like to call “the avocado toast theory”, show us is that Millennials have different values than other generations. We have learned through other studies that Millennials value convenience and experiences more than excessive purchases like cars and homes. They are living more for the now, rather than the future, which is probably why their anxiety around dealing with long-term financial planning is so high.
Millennials have to deal with a lot of financial issues that other generations didn’t have to which accounts for their stress. For Millennials, it can be seemingly impossible to save any money when you are paying $700 a month in student loans. You must stop thinking of your student loans as a debt that is holding you back and start looking at it as an investment into your future. Those loans paid for the education that will help you to reach your career goals and eventually get you to a salary that will alleviate some of the stress of planning for the future.
This brings us back to basic budgeting and taking things one step at a time. Do you need to buy a coffee everyday at your local coffee shop? Do you need to buy all of your groceries at a specialty food store? Do you need to be the first to try out the new bar that opened up down the street? While it’s ok to do all of these things, moderation is key. By cutting back on buying coffee or only going to the specialty grocery store occasionally, you’ll see you can start saving money a little more easily. Saving is key to relieving some of this stress about planning for your future.
Figure out a savings plan that you know you can commit to and put this money aside first. One of the problems many people have with savings is that they wait until they pay all their bills, then whatever is left over (which may not be much) is what they try to allocate towards savings. By rearranging this thinking to saving money first, then living on the rest, you will have a better chance at reaching your savings goals. Start small and work your way up. If you can save $20 a week, great! Save it! If you can save $100 a month, even better! Hold yourself accountable to this plan and you’ll slowly start to see your savings account grow. This sets you up for a more stable future.
The bottom line - be conscious of what you are spending, cut back a bit and start investing in yourself and your future. Money can be stressful, but if you change your mindset around it, you’ll start to find that it’s not as stressful as you think. It’s never too late to start planning for your financial future. Talk to a Leap Adviser to set you up on a sane, sound, and simple journey to reaching financial success.