Millennials: Here’s How To Catch Up If You’re Feeling Financially Behind

Cropped shot of an attractive young businesswoman standing alone and feeling stressed while going through her finances in her home.
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Millennials are now ages 26 to 41, so they are likely going through some major life transitions such as climbing the career ladder, buying a home or having kids. It’s also a time when many people may be evaluating their financial standing and may be feeling behind. Perhaps you have debt or haven’t started saving for retirement, or maybe you have nothing saved for emergencies. Whatever the case may be, there are ways to “catch up.”

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GOBankingRates spoke with financial experts to get their best advice for millennials who feel financially behind.

Reevaluate Your Budget and Spending Habits

If you’re falling behind on your financial goals, this could be a sign that your spending and saving are out of whack.

“It’s a good idea to take inventory of your entire financial situation,” said Maya Nijhawan, personal finance expert and co-founder and COO of Finch, a rewards card that auto-invests the cash back you earn. “Identify your fixed costs and where you may be able to reduce, pause or cut spending to give yourself some breathing room.”

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In addition to cutting back on monthly costs, regularly check in with yourself about how you are spending your money.

“Ultimately, managing your money comes down to choices and tradeoffs,” said Abby Wendel, president of consumer banking at UMB Bank. “Do you stay within your budget by making lunch at home or do you always buy take-out? Which car do you buy — new, used or do you lease one?”

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Make a Plan for Paying Off Debt

If you have debt, it can feel like being in a bottomless pit you will never get out of. But with the proper planning, it is possible to become debt-free. Nijhawan recommends starting with paying down your highest-interest-rate debt first and avoiding taking on more debt while doing so.

“With inflation and cost of living increasing, it can be tempting to turn to your credit cards to cover increased costs, but it’s important to remember to only spend what you can afford to pay back in a given month,” she said. “Carrying a balance is super expensive. Most credit cards can cost you between 15% to 30% a year in interest. Each day your balance remains outstanding past the due date, you’ll accrue interest on your balance, and this can quickly snowball, not to mention negatively impact your credit score.”

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Start Saving for Retirement ASAP

Even if you have nothing saved for retirement, thanks to compounding interest, you can catch up to where you need to be.

“Compound interest isn’t a myth,” said Howard Dvorkin, CPA and chairman at “Millennials might feel like they’ve fallen behind where they expected to be or where their parents were at their age, but expectations aren’t tangible. Your dollars are. Invest in a 401(k) if you have access to one [or] a Roth IRA if you don’t. It won’t seem like it matters, and for a while, it won’t. But years from now, you’ll be glad you did.”

If you do have a 401(k) plan through your employer, be sure that you are contributing enough to get your full employer match.

“A 401(k) match is where companies help boost your savings by matching your 401(k) contributions. For example, a common match is dollar-for-dollar up to 3% of your income,” Nijhawan said. “So if your income was $50,000, your employer would match your 401(k) contributions dollar-for-dollar up to $1,500. This is essentially free money — don’t leave it on the table.”

Build Up an Emergency Fund

Perhaps even more important than saving for your future self is to make sure you have a financial cushion built up that can protect you in the case of an unforeseen financial emergency, such as a job loss or medical event.

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“Emergencies will happen to us all. Since we can’t predict what they’ll be or when they’ll happen, the best thing we can do is build up our safety net,” Nijhawan said. “Having an emergency fund will give you the peace of mind that you’ll be able to cover these unexpected expenses without going into debt. You’ll also be able to focus on the issue at hand without worrying about your finances. It’s recommended to save up at least three to six months worth of expenses. Setting up auto-payments into your emergency fund is a great way to help you reach your savings goal.”

Look for Ways To Earn More Money

It’s easier to catch up on your goals when you have more income to play with.

“As a general rule of thumb, when it comes to your salary, you should be reviewing it once a year to make sure you’re being paid what you’re worth,” Nijhawan said. “Equip yourself with quantitative and/or qualitative evidence that highlights your performance since your last raise, and determine the market rate for your position — knowledge is power! You could also consider taking on a side hustle to boost your earnings, cover increased costs and press the accelerator towards your financial goals.”

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About the Author

Gabrielle joined GOBankingRates in 2017 and brings with her a decade of experience in the journalism industry. Before joining the team, she was a staff writer-reporter for People Magazine and Her work has also appeared on E! Online, Us Weekly, Patch, Sweety High and Discover Los Angeles, and she has been featured on “Good Morning America” as a celebrity news expert. 
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