Ranging in age from their mid-20s to early-40s, millennials are now saving for their first homes, building businesses and starting families. However, they also face high financial barriers, including rising housing costs and towering student loan debt. Most millennials haven't reached their peak earning years yet, making overcoming these obstacles a comparative challenge.
But there are clear signs of hope, including this generation's idealism. A recent survey by Morning Consult suggests that many millennials will benefit from
Examining millennials and money
Compared to their parents or grandparents, millennials—those born between 1981 and 1996—have unique financial habits, goals and hurdles. Many have faced obstacles to balancing their long-term financial responsibilities and needs. Consider student loans: millennial borrowers carry an unprecedented amount of student loan debt—an
Where do they spend their money? Many tend to prioritize experiences over things.
Millennials as a group have felt the effects of unique financial dynamics, as they have experienced both The Great Recession and the economic fallout of the COVID-19 pandemic during their peak working years. The analysis by Morning Consult found that millennials were more likely to express concern that the money they have or save won't last, and that finances "control" their life. At the same time, research has found that people in this age group are also more willing to improve their credit scores, invest and say they're working on money management goals. For the members of what represents the
How millennials can set smart financial goals
Creating goals for your finances is a common strategy for more effectively managing money in the long term, but it can be particularly helpful for millennials, who still have time to right the ship if they haven't developed the healthiest habits to date. Because they're still at least two decades away from the traditional retirement age, they can capitalize on compound interest to help them get the most out of what they invest.
If you're a millennial and you're looking for financial clarity, here are some goals to consider working on:
The bedrock of financial health is accountability. Find ways to control your discretionary spending with smart
Pay down "bad" debt
Pay more than the minimum on credit cards and other high-interest rate debt when possible. In 2020, the average millennial
Build an emergency fund
No one can predict what medical crisis or layoff is around the corner, so it's always important to be prepared. As a general rule of thumb, you should have at least enough set aside in an
Save for your retirement
The sooner you start investing in long-term goals—like retirement—the less strain you'll put on your budget later in your career. Those who begin putting away 10%-15% of their paychecks in their 20s, including matching contributions, are generally on track. If you get a later start, you'll likely have to increase that percentage to keep up. As you make contributions, keep tabs on
Give back to others
In addition to taking care of their own needs, many millennials also give back to those in need. A 2020 survey by Zelle showed that millennials were
Save for short- and medium-term goals
Many millennials are growing their families, buying homes, becoming entrepreneurs and furthering their careers. Consider setting aside a portion of each paycheck for any opportunities that may arise, such as investing in a startup business, accepting a dream job that requires relocation or renovating your house for a new addition to the family. Generally, this money should be saved in a vehicle that provides a reasonable return
Need an expert hand that can guide you in learning how to set financial goals of all sizes? Consider connecting with a