How Millennials Can Alleviate Financial Stress
- Tracy East
September 5, 2018
- 2 Comments
A 2016 study from Payoff surveyed over 2,000 people and discovered that almost a quarter of respondents had PTSD-like symptoms due to their financial stress. For millennials, that number was as high as 36%. Many had nightmares of becoming homeless. With any kind of severe stress, responses like fear and denial, are common.
That’s not the only shocking statistic. In 2017, a Bank of America Merrill Lynch report found that only 48% of young adults were positive about their financial future. Other studies have reported that as many as 45% of millennials haven’t started saving for retirement, partially due to the stress of student loans. A PWC study in 2017 found that 51% of millennials and 57% of Generation X take money out of their retirement funds for other expenses. These statistics mean that nearly half of millennials aren’t financially secure.
Over the last 10-15 years, student loan debt has increased at a staggering rate. Millions of Americans are burdened by student debt. Paying off student loans prevents many young people from saving for retirement or pursuing their dreams.
So with all of this sobering news, how can millennials overcome financial stress and start living a more secure financial future?
Tips to minimize financial stress:
- Start budgeting: You don’t need to be an expert to create a budget. By simply adding up your predicted income and subtract expenses, you’re already on track. Add some flexibility since you never know how many unexpected costs you will encounter. Don’t beat yourself up if you don’t stick to your budget down to the peny, but it is beneficial to have a reliable guide to what you can and can’t afford.
- Track your spending: It’s easy to underestimate how much we truly spend. Many of us believe that we primarily stick to only “necessary purchases.” Perhaps this is true, but you’ll never know until you look at your spending and find out where your income is going. There are plenty of free apps to help monitor your spending habits. This technique will give you a realistic view of how much you’re spending and make you think twice before making any purchase which will help cut down on financial stress.
- Cut back unnecessary expenses: Once you start tracking your spending, it’s time to map out where all your money is going and identify points where you can start saving. Movies, food, and concerts can be reduced a little each month to add to your savings.
- Create an emergency fund: There is always a possibility that we will need some money to fall back on in case of a catastrophe. It might be sickness, unemployment, a natural disaster, car repairs, or any number of other issues that come up. These unexpected expenses cause a tremendous amount of financial stress. Building an emergency fund is an important step towards taking control. It can be intimidating at first, but it can be done. You can tackle important expenses like rent and debt, but don’t neglect the importance of an emergency fund.
- Save up for retirement: Many young adults falsely believe that they don’t need to begin saving because they’ve got so much time ahead of them. That is a misconception. The earlier you start your retirement fund, the easier things will be in your later life. An employer-matched 401(k) is ideal, but you may need to opt for an IRA if your employer doesn’t offer a 401(k).
- Set financial goals: Financial goals are important to your success, and help eliminate some of the financial stress that goes along with uncertainty. Consider both monthly and yearly financial goals. Establish how much you want to save and earn and track your progress each week. Your objectives will give you the motivation to work towards every day.
Some say that money is the root of all evil. While the truth of this statement is debatable, it’s impossible to deny just how much stress finances can have on our lives. A few simple steps can significantly help alleviate many of of the concerns that cause us financial stress.
If you are experiencing financial difficulty and are looking for a solution, non-profit credit counseling can help you make sense of all your options. Contact us today for a free financial assessment with one of our certified credit counselors.