Even the most wealthy and successful people are prone to money mistakes. So how can we avoid making those mistakes as Millennials today? Look to the technology that surrounds us. We live in an ever-changing world of technology with access to limitless information right at our fingertips. As the millennial generation, we have an advantage that people did not have just a few years ago. With all of the incredible financial/lifestyle experts, tools and resources available, Millennials are poised to be a generation that is financially fit from the start.
Defining the financial realities of the Millennial Generation starts with a budget
“The Millennials are facing a series of headwinds that their parents’ didn’t: graduating from school with heavy student loans, working increasingly in the “gig economy” so not always having access to employer based retirement programs, statistically likely to live longer in retirement and facing many more choices of financial products and options. The Millennial generation has been launched into a complex financial world, face an array of choices and virtually no guidebook or formal financial literacy education.” Manisha Thakor, Director of Wealth Strategies for Women at Buckingham & The BAM Alliance.
If you want less stress and a brighter future, it is time to get serious. Setting a budget and sticking to it is not a “one-and-done” task. If your expenses or income are fluid, make sure you update your budget regularly. Anyone can set a budget, but by sticking with it you create the essential foundation of your financial fitness. And don’t worry, it can be fun. Creating a budget plan that is realistic and implemented over the long term builds in “fun money,” money spent on the things you want to buy or experience! Social payment apps like Circle, which make sending and receiving money as easy as sending a text message, allows you to instantly send and receive funds giving you the freedom to stay on top of your budget from anywhere at any moment. When it comes to money, Millennials expectations are totally different than generations before them. They don’t view their finances as physical assets, but digital ones.
“The financial reality for Millennials is “challengingly optimistic”. Between joining the workforce in the aftermath of the financial crisis, managing record student loan debts and navigating rising living costs on stagnant salaries, Millennials have no shortage of financial challenges to overcome. That said, they have unprecedented access to low cost financial tools and resources (plus time) on their side, offering plenty of reasons for Millennials to remain optimistic.” Stefanie O’Connell, Millennial money expert and host of the series Money Minute.
Do we have the financial education to best prepare us for financial organization and success?
As a generation with the fastest growing disposable income, Millennials are at the forefront of a massive disruption and changing the way people think about money. They are not looking to banks to solve their financial problems, instead they are turning to internet companies; they want digital solutions to age-old finance problems. More than 50% of Millennials say they haven’t been to a bank teller in over a year, according to a recent survey by Circle.
“The average person I meet has received more education on how to set up their home Wi-Fi network than how to manage their personal finances. It is mind blowing to me that an area of life that can cause so much stress and tension (in your own life, in your relationships, in your ability to focus clearly on work) is given so little formal focus from an educational standpoint” says Manisha Thakor.
“Slow and steady wins the race” also applies to Millennial finances. There is no magic, no secret formula, nothing that is going to help you go to bed with only a few dollars to your name tonight and wake up “rich” tomorrow. So once you have thrown that fairy tale out the window, you can focus on getting “rich” the right way. As Millennials, we value experience over tangible things. So the designation of “rich” differs from how previous generations defined it. In order to win the race in your financial future, you must be educated about what tools are available to help you achieve your goals.
Short term & long term planning — It has to happen.
Prioritizing and setting financial goals allows you to develop a plan, determine which are long term or short-term goals, and gives you a roadmap for achieving each goal. Most financial goals fall into two categories – short term and long term. Generally, short-term goals are those that you can reach in one or two years – starting an emergency fund, paying down debt, or saving for a vacation. Long-term goals will take more than a couple of years to achieve – saving for a down payment on a home, buying a car, and saving for retirement.
No matter how old or young you are and no matter what your current income is, you should have a goal of saving for retirement. If you have an employer who offers a 401(k), chances are they will match investments. This is a smart way to take advantage of free money. If you do not have an employer who offers a 401(k), look into the varying types of IRA funds for retirement. Starting early gives that compounding interest time to work its magic.
“You should start becoming serious about saving with your very first paycheck. Many people say they will get serious when they make more money. That’s like saying you will go to the gym after you lose weight. I don’t care if it’s just $5 week. Once you commit to saving – as a habit and a practice – opportunities to do it more often and at a bigger level inevitably present themselves” says, Manisha Thakor.
Life is full of unexpected surprises from something as simple as a tire blowout to a major medical expense — this is why it is important to be prepared. When outlining your short and long term goals make sure you consider an emergency fund. Emergency funds are a key part of a healthy personal finance situation and they allow you the room to breathe when something comes up.
“The more you remain proactive about your finances, the less you resign yourself to becoming a victim of your financial circumstances and the more you empower yourself to use your money as a tool to achieve your goals. I think student loan debt may be one of the major reasons Millennials are risk averse, which may be hampering Millennials’ ability to earn more. For example, Millennials may not ask for a raise or negotiate aggressively for fear of losing the job they need to keep up with their student loan payments” according to, Stefanie O’Connell.
Build wealth, not debt
Millennials should be looking to build wealth, not debt. And the sooner they start building wealth, the easier their financial future will be. But nonetheless you need good credit, and that means having to borrow. If you don’t have a credit history, it’s hard to get a loan, a credit card, or even an apartment. Whether you are building your score using a credit card, car loan, or some other type of loan, it is important to make 100% of your payments on time. Keep your debt low and pay it off monthly, keep the same accounts open as long as possible, and do not have too many accounts open at once.
“Financial fear can be very real, but it can be eased with knowing how to prepare and protect your finances. Especially as Millennials face major milestone moments in their life such as getting married, buying a home and having children. Having a plan in place can play a critical role in removing financial fears and providing an extra level of security for yourself, your loved ones and your salary” says, Lindsey Pollak.
Growing your financial portfolio can be scary. Even thinking about what your financial future might look like is a daunting task – especially when you just aren’t sure where to start. The internet, social media, and mobile apps have made financial education low cost and accessible. In fact, you can get a fairly comprehensive financial education online for no cost at all.
Social spending. Help is herewith online and mobile apps like Circle.
Millennials are true socialites. We go out, we have a good time, and we thrive on our experiences. One of the best things about technology for us is the ability to quickly share and receive payments for your next experience, on the go. And with Millennials carrying less physical cash than older generations, splitting a bill between a group of people isn’t as simple as pulling a $20 out of your wallet.
“Digital communication is second nature for this generation and reflects how they are most comfortable communicating. Millennials gravitate towards the use of mobile apps for their ease of use, flexibility and convenience. I don’t think this trend is going to revert. Their use of mobile apps crosses over into every aspect of their life from planning vacations to checking their bank accounts. I think this only increases over time as more brands reveal fully integrated services that allow this group to use their loyalty programs and create customized experiences.“ Lindsey Pollak
That is where social payment apps like Circle come in handy. Millennials use digital money and mobile apps instead of cash or checks to settle outstanding and those always awkward “I owe yous.” Right now, 55% of Millennials say they have between 1-5 apps currently linked to bank accounts or credit cards. Nearly half of Millennials say they’re more likely to Circle friends in order to split the dinner bill, pay the rent between roommates, organize group vacations, and even send a wedding gift. And for the Digital Natives that have the iOS 10 update, they can simply submit payment to a friend via iMessage. (Gotta love that!)
We all track our obvious expenses every month: rent, car bill, insurance, business expenses. But the miscellaneous spending can really add up each week when friends aren’t able to pay you back for yesterday morning’s coffee. Having the ability to easily send and receive funds empowers all Millennials to settle debts immediately, and if you happen to be the always generous friend, get paid back. Apps like Circle make “friend-debting” a thing of the past.
If you learn how to manage your money at a young age, no matter how much or how little you may have, you are already starting out on the right foot. Fortunately, as a Millennial we have access to hundreds of new exciting financial tools. Tools like Circle which make payments a breeze. With such easy access to these technologies, it is simple to track your spending, make a budget, and pay anyone, anywhere and at any time. At the end of the day, staying financially fit as a Millennial is only an app away.