Most Millennials Feel Financially Insecure: Experts Offer 4 Steps To Security
Written by
Yaël Bizouati-Kennedy
Edited by
Chris Cluff
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Millennials face specific financial challenges. They already have been through a recession, and now sticky inflation, the resumption of student loans and soaring rates are making many anxious.
The numbers speak for themselves: A recent H&R Block Outlook on American Life 2023 study found that a whopping 65% of millennials feel financially insecure.
What’s more, the study found that 62% of them are extremely concerned about inflation and 44% say they are overwhelmed by financial burdens. On top of that, a recent GOBankingRates survey revealed that most millennials have less than $100,000 saved.
“With inflation, sky-high housing costs and wages not keeping up, it is no surprise that many millennials feel financially insecure,” said Jay Zigmont, Ph.D., MBA, CFP, founder of Childfree Wealth. “Add on that many millennials are struggling with debt, particularly student debt, and it can seem impossible to get ahead.”
Zigmont added that financial security requires sound financial planning and working on money mindsets or behaviors. Here are some ways experts recommended to alleviate millennials’ financial stress, help ease this financial insecurity and steps to get more comfortable.
Get a Financial Foundation in Place
First, Zigmont argued that millennials need to get on budgets, get out of debt and build emergency funds of three to six months of expenses.
“Having a budget and a fully funded emergency fund can help to turn tough times into just annoyances,” he said.
Once your foundation is set, focus on saving for your goals.
“The problem for many people is that they try to make big financial moves, such as buying a house, before getting their foundation set,” he said. “Financial success takes small, consistent steps over time, not giant leaps.”
Know Where You Stand Financially
Several experts said one way to help ease this financial insecurity is to make sure you know just what you have and where you stand financially.
“A surprising number of adults do not,” said Austin Kilgore, analyst at Achieve Center for Consumer Insights.
To do so, Kilgore said you need to calculate your net worth — the total value of your assets (or what you own) minus your liabilities (or what you owe).
“Your assets might include the value of your home, retirement funds, savings accounts, stocks and bonds, jewelry and your car,” he said. “Then subtract your liabilities, such as mortgages, student loan debt, vehicle loans and any credit card (or other) debt. If your net worth is negative, you need to revisit expenses and earnings. Revisit your net worth annually to see how you are progressing.”
Understand Credit Reports
Also be sure to understand what credit reports are and what yours say about you. The three major credit reporting agencies — Equifax, Experian and TransUnion — each compile reports on consumers’ use of credit.
“The reports look at credit history, amount of credit available and used, number of late and on-time payments, and whether any payments due are in default,” Kilgore said. “Accuracy on the reports is important because that data is used to calculate credit scores.”
Reduce Debt and Increase Your Income
Brandon Galici, founder at Galici Financial and a millennial himself, said that beyond increasing emergency funds there are two key steps that generation should take.
“Reduce their debt: If their debt rate (annual debt payments divided by gross income) is greater than 30%, then there is a high likelihood that it’s causing millennials stress,” he said. “I suggest that they are intentional about attacking debt to minimize their financial anxiety.”
Then, aim at increasing your income.
“This will help millennials in both boosting their emergency fund and/or reducing their debt,” he said, noting that it was encouraging to see in the survey that 43% of millennials are actively working toward learning new skills. “This is an excellent way for them to advance in their career, launch a side business and ultimately make more money.”
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