How Older Millennials Can Solve Their 7 Biggest Money Problems

millennial money problems

Older millennials — generally defined as people ages 25 to 35 — are at a prime age for building their careers and making big life choices.

College is behind most of this demographic, they’re well into their careers and not even the Great Recession has dimmed their financial optimism — 80 percent expect they will do as well or better than their parents, according to the Bank of America/USA Today Better Money Habits Millennial Report.

Yet the financial challenges this generation faces are different than those of the past, as well as those of younger millennials (who can be as young as 15, with the generation spanning birth years of 1980 to 2000).

Older millennials also have a unique take on money and finances, said David Weliver, founder of personal finance site MoneyUnder30.com.

“Coming of age in the recession and recovery, it affected us at a critical life stage with money,” Weliver said. “It’s made us more conservative financially. But the downside is that it also made us a little more anxious about money.”

Following are the seven biggest money challenges for people in this age group, and tips for solving those dilemmas.

Read: Survey Finds 53% of People Think Most About Work or…

1. You Can’t Stick to a Budget

For about one in five older millennials, sticking to a budget is their biggest financial challenge, according to the 2015 Life + Money survey conducted by GOBankingRates. For this study, older millennials were defined as people ages 25 to 34.

Younger Americans were more likely overall to struggle with this than older age groups. This can be partly chalked up to inexperience, as millennials have had less time to develop financial discipline and control over spending.

“I hated budgeting,” said Weliver of his early attempts at building this skill. “I tried to follow a strict budget, but it’s hard to predict what your spending will be, and naturally you might go over.”

Some of the struggle to stick to a budget also comes from the fact that older millennials are in an earlier stage of their careers.

“Earnings are still low and you’ve just started earning pay bumps, which means the gap between income and expenses will be smaller,” Weliver said.

For others, debts and student loan payments eat up a large portion of their budget.

To combat this, Weliver recommended looking for ways to earn more income and making it a priority to pay down debts. He said it also helped him to set up a system to limit discretionary spending, such as using cash only or setting up a separate bank account for spending money. This reinforcement of budget limits will help you become more aware of your spending habits, so you can better keep them on track.

2. You’re Stressed About Money

Older millennials think about money more than any other age group, with nearly one-third saying this was the topic they thought most about each day, according to the 2015 Life + Money Survey. Overall, just 18 percent of people named money as their most common daily thought.

A survey from the American Psychological Association found that money is a source of stress for a large majority (75 percent) of millennials.

But stressing about money problems won’t fix them. The way to lower your financial anxiety is to identify the central source of money stress in your life and make solving that issue your top financial priority.

Maybe you have debts and credit card balances adding up, are consistently behind on bills, or just feel generally insecure due to a lack of savings. Once you know the biggest cause of stress, take steps to address the problem. As you make progress on this issue, you will get relief from stress and feel more in control of your finances.

3. You Barely Break Even, Let Alone Save

Another key to cutting down financial stress is building up a bank account buffer. “The biggest thing that will take you from stressed out to approaching money with a healthy mindset is an emergency fund,” Weliver said.

For most millennials, however, finding extra money to build a financial cushion will require a big change in habits. More than half of millennials live paycheck to paycheck, meaning they spend what they make each paycheck and don’t reserve any funds for savings, according to Forbes. Older millennials know this is a big problem for them — always living paycheck to paycheck is the most money common fear in this age group (23.3 percent), according to the 2015 Life + Money Survey.

Related: Why Millennials Are Better at Saving Than Any Other Generation

This is backed up by data from Moody’s Analytics, which shows that adults under 35 actually have a negative savings rate of 2 percent on average, reports The Wall Street Journal. The average millennial spends 2 percent more than they make each month, either dipping into savings or going into debt to cover that extra amount.

Building a bank account buffer and sticking to a budget are keys to getting out of the paycheck-to-paycheck cycle. Weliver suggested saving smaller amounts until you have a cushion of several hundred dollars in your account, then never allowing the minimum balance to drop below that amount. With that in place, continue practicing your savings habit until you’ve saved a few months’ worth of expenses and you’re comfortable with the size of your emergency fund.

4. You’re Weighed Down By Debt

The website Edvisors analyzed government data and found that today’s college graduates are the most indebted in history. The 2015 Life + Money Survey revealed that the biggest financial fear for around one in five millennials is living in debt forever. High student loan balances have held older millennials back from a number of accomplishments — from moving out of their parents’ homes to getting married or buying their own car or house.

Fortunately, older millennials are giving their student debt the attention it deserves. “We’re more concerned about it than the people who came 10 years ahead of us,” Weliver said, “and we’re doing a lot better at paying it off.”

The message to older millennials feeling weighed down with debt? “You have to face the music and make a plan,” Weliver said.

He suggested borrowers concentrate first on paying on time, or figure out a repayment plan if this is a struggle. Alternately, “there are a lot of new refinancing options available to help you address student loan debt,” Weliver said. He suggested doing your homework to see if refinancing your student loans could reduce your interest rate, payment or both.

Next, put extra money toward debts, focusing on the balance with the highest interest rate. Finally, give it time — even with steady efforts, it will take a while to get out from under your debts.

Read: 9 Ways to Pay Off Student Loans Before Your 30s

5. You’re Scared of Losing Your Job

Millennials comprise one-third of the U.S. population, which puts more people in the same life stage and creates a competitive job market for this generation. With more millennials boasting college educations, this generation also finds it harder to get ahead and differentiate themselves than their college-educated parents did. Plus, as recent college grads during the recession and recovery, this group saw the worst of the job market dips.

So it’s unsurprising that, of all age groups, older millennials are the most likely to fear losing their jobs, according to the 2015 Life + Money Survey. Around 17 percent of people ages 25 to 34 say job loss is their biggest financial fear, compared to 15 percent overall.

Building an emergency fund that could cover several months’ worth of expenses will help give you financial security in the face of employment. If you’re afraid of job loss, start with the goal of saving this fund.

Another way to improve your financial security, Weliver said, is to “develop an income stream outside of your regular job.” Even something small, like freelancing a few hours a week or maintaining a side gig as a dog-sitter, can be helpful.

“It goes back to the saying, ‘Don’t put all your eggs in one basket,'” Weliver said. “Knowing you have that second income available to tide you over will make a huge difference if you lose your job.”

6. You Can’t Afford a Home

Many older millennials are nearing the stage of life when they’re wanting to purchase their first homes — 16.6 percent of people ages 25 to 34 named this as their top financial challenge, according to the 2015 Life + Money Survey

But millennials are also putting off owning a home. They’ve shown a preference for living in big cities, where housing costs are often high enough to price this demographic out of homeownership. And they are comfortable with renting. Today’s first-time homebuyers rent for six years on average before making the move to homeownership, according to a Zillow report. That average was just 2.6 years in the 1970s.

Buying a home is a big financial step that should never be rushed. Carefully weigh the costs of home ownership and make sure you can afford it, especially if you live in a high-priced area. “It’s up to individuals to decide if dealing with a big mortgage payment is worth owning a home and building equity,” Weliver said. “Just realize it’s going to require you to cut back in other areas of your life.”

If owning a home in your current city is too much of a stretch, consider widening your search to a cheaper areas that are still nearby. Or you might want to rent for a while longer and continue to save until you have a bigger down payment.

Read: How Millennials Are Making It Easier for You to Buy a Home

7. You Haven’t Started Thinking About Retirement

It’s probably no surprise that the 2015 Life + Money Survey found that older Americans (35 and up) are more concerned with retirement than millennials. But millennials still need to plan for retirement. “We’re going to live longer than past generations,” Weliver said, which means longer retirements that will require more savings. “Chances are good that Social Security and other retirement support systems won’t be as robust for our generation,” Weliver added.

If you’re just starting out with retirement planning, it can be helpful to imagine what kind of life you want. “For millennials, the vision of retirement is changing,” Weliver said. “The typical idea of you stop working and just go golf for the rest of your life — it’s not relatable for our generation.”

Instead, older millennials are focused more on building the financial independence to lead the lives they want at every life stage. “This financial planning is less about reaching that goal at the end of life and more about building financial security as you go,” Weliver said.

Achieving this kind of ambitious goal might require some new strategies. Millennials will need to be more proactive about saving and financial planning.

“The earlier you start saving, the better,” Weliver said. “Even if you start with just a tiny amount, that can make a huge difference.”

Enroll in your work-sponsored 401(k) and start saving. If your employer offers matching funds, make sure you’re saving enough to qualify for this free money. If you don’t have access to a 401(k), open your own IRA. The move to start saving now for your future is a key to building lifelong wealth.