Financial Security for Millennials
Future financial security may be at risk for Millennials. More than half of young adult households have student loan debt with the average amount above $30,000. Estimates show that Millennials may have fewer resources in retirement than previous generations. Young adults are less likely to save, invest, or purchase a home because starting salaries are low and extra income is often going toward repayment of student loans.
Here are some tips to help Millennials build long-term financial stability:
Minimize debt. If you’re still in school or thinking about graduate school, borrow only the minimum amount needed and supplement with income from work. Use federal loans before considering private loans. Look for the lowest interest rate. Investing in an education is typically considered good debt because it has the potential to increase your future earning potential. Think about your future ability to pay back the loan amount. Using student loans to finance a lifestyle now can lead to financial hardship later. Be cautious of taking on other types of debt including credit cards or car loans.
Manage student loans. Already out of college? If you’re having trouble making ends meet, consider your options for repaying student loans. Some loans have programs to revise payment amounts. Contact your lender for details.
Save for retirement. Young adults may be reluctant to set aside money retirement because it seems such a long time away. However, the sooner you start, the more time your money has to earn interest. Saving even a small amount now can add up to a big retirement fund. Opt in to your employer provided retirement fund. Some employers match your contributions – it’s free money. Don’t have an employer provided fund? Open an IRA
Build your credit score. It’s easier to build and keep a good credit score than to recover from a bad one. Pay bills on time. Don’t max out your credit cards. Check your credit report regularly at www.annualcreditreport.com You’re entitled to a free annual report from each of the three credit bureaus. Spread these out across the year to check a credit report every four months