Five Steps Millennials Can Take to Overcome Today’s Financial Challenges

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In our previous article we looked at six key financial problems that today’s Generation Y are facing. And whilst many millennials in their twenties and thirties are taking steps to try and navigate the current economic landscape, there is more that can be done.

In this article, we offer some practical information and strategies on how millennials can help improve their chances of a wealthier, and therefore more secure, future.

1. Improve Your Financial Knowledge

According to a PwC survey, only 24% of millennials can demonstrate basic financial literacy when it comes to subjects such as mortgages and the stock market yet many admit it is an important topic to learn – 79% think it should be taught in schools and 70% felt it should be taught by parents. The reality, though, is that Generation Ys were unlikely to have received this desired education from either source.

As with anything in life, it’s never too late to learn and you are much better placed to solve a problem if you understand it. With a plethora of information available online, it’s never been easier to start your financial education journey. That said, with so many resources available, it can also be daunting by not knowing where to start. This is where a financial adviser can help.

The same PwC survey also found that just 12% of millennials have sought professional help with debt management and just 27% have sought advice on savings and retirement. With several of our advisers being millennials themselves, we are ideally placed to help this demographic. With market-leading technology, we can provide clients with real-time insights and performance feedback on their investments which can help clients to better visualise how their money is working for them. When you can see your money working as hard as you do, it’s a great incentive to save.

2. Build Up A Buffer Fund

As mentioned in our previous article, many millennials have little, if any, emergency savings. Our suggestion is to take some time to sit down and thoroughly analyse your monthly outgoings, as this will help you to identify areas that you may be able to cut back on.
By putting a small amount aside each month, you may quickly start to build up a reserve cash fund to help you cope with unexpected outgoings. By selling a few items online or by having your morning coffee at home rather than buying one from a coffee shop, you may soon start to accumulate extra savings. Another option is to set up a monthly payment into a savings account – over time this small amount will add up and provide you with that all-important emergency fund.

3. Prioritise Debt Repayments

Tackling debt is more effective when you are paying towards the principal amount, rather than chipping away at the interest. With student debt acting as one of the key financial obstacles for today’s millennials, the sooner it is paid off, the sooner you can start planning, and saving, for your future. While the lower monthly payment options may seem more attractive, you will end up paying more money back via interest over the lifespan of the loan so it is beneficial to start paying off as much as you can as early as possible.

For credit cards, it may be prudent to consolidate these with a low-rate personal loan or by opening a new 0% interest credit card and transferring the balance, subject to your circumstances. The sooner your debts are paid off, the more money you will be able to save.

4. Make Savings On Your Biggest Outgoings

Not surprisingly, rising rents account for a large proportion of millennials’ monthly outgoings but it does not mean that you cannot get your finances under control. Whilst living in a city, particularly London, can mean higher rental payments, it can also be an opportunity to save on other expenses. With city centre transport links, you could sell your car (if you have one) and buy a travel season ticket instead. While not having a car does have its downsides, especially if you are used to having one, the rise of car clubs has enabled city dwellers to have access to, and pay for, a car only when they need one. This means you can save on petrol, insurance, parking and depreciation.

One other option is ask your employer to work remotely. Flexible working is more popular than ever – in a survey by conference calling provider PowWowNow, 58% of workers are offered flexible working but 24% don’t make use of it. Working remotely can both save you money on travel costs and/or allow you to live in a cheaper part of town; you may however incur larger costs for heating and lighting at home, so you will need to consider this.

5. Grow Your Income

While the current market uncertainty may not appear the ideal time to start practicing your entrepreneurial skills, freelancing outside of normal working hours can not only boost your income but allow you to pursue, and earn from, other interests or hobbies. Many freelancers started out part-time and grew their additional jobs into full-time careers. Furthermore, many of today’s still thriving companies – Disney, United Airlines and Duracell – all started out during the Great Depression, proving that a robust and stable economic cycle isn’t the only time to start your own business.

If you’d like more information on how to restructure your outgoings and start saving for your future, please contact us here.

Sources: https://www.pwc.com/us/en/about-us/corporate-responsibility/assets/pwc-millennials-and-financial-literacy.pdf
https://www.telegraph.co.uk/travel/maps-and-graphics/nationalities-that-work-the-longest-hours/
https://www.artofmanliness.com/articles/millennials-can-overcome-6-biggest-financial-challenges/
https://www.forbes.com/sites/andrewjosuweit/2017/06/08/3-money-issues-millennials-stress-about-the-most/#968426c2c2b2

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