“Want to save more? Just skip your daily coffee shop routine.”
It’s well-meaning advice that commonly permeates the personal finance space, but for millennials — who are facing high student debt payments, decreasing homeownership and stagnant wages — skipping that latte alone just isn’t going to cut it.
This generation — born between 1980 and 1996 — has experienced some of the most significant economic booms in history, but also the Great Recession. And while older millennials entered the job market shortly before or during the 2008-2009 recession, the younger cohort — those currently in their early 20s — are beginning their careers in a similarly bleak economic time.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
For millennials, the financial fallout from the COVID-19 pandemic comes during their key asset accumulating years. A 2019 PwC report found that 76% say their financial situation is stressful; add the recent global pandemic, and stressors can easily multiply.
While the path to financial wellness is challenging for any generation, it’s easy to overlook the unique challenges faced by millennials. For those in that demographic, here are five ways you can reduce stress on your financial wellness journey, and build financial stability while enjoying life now.
1. Navigate a challenging job climate
Millennials struggling to keep or find a job should be flexible and creative in their job search. For example, consider short-term work or work outside your area of expertise. It may not be what you planned to do, but the income comes in handy and it provides you with valuable workplace experience. Preparing for remote interviews and virtual networking by practicing mock video and phone interviews can ready you for remote hiring. Creating a professional social media presence on remote networking groups can also help. And depending on your financial situation, consider returning to school and learning new skills and training. Just be wary of educational debt.
2. Take advantage of employer help with financial wellness
For those who have a job, employee benefits play a greater role in supporting overall financial wellness than they did in years past. For many employees, the core financial products that you need are found at your worksite already, such as a retirement plan, insurance protection and a health savings account.
Whether just starting a new job or years into your career, make sure to take time to understand every financial benefit your employer offers, including health, dental and vision coverage, retirement plan matching and financial guidance provided by professionals — either from your company, outsourced HR or a retirement plan service provider. Retirement plan matching, in particular, is essentially “free money,” so take advantage of it, even if your early contributions are relatively small. The earlier you start getting free money, the longer it has to grow, and, thanks to compounding interest and returns, the more prepared you’ll be when you reach retirement.
3. Take a look at life insurance
While many millennials may have access to life insurance through an employer, don’t discount the importance of an individual policy as well. Whether to cover student debt payments, a mortgage or rent, or to insure an entrepreneurial venture, there are many reasons millennials should consider broad life insurance coverage to provide a financial safety net to loved ones. Life changes, such as buying a home, getting married or having children — common milestones for this demographic — require more protection, including that provided by life insurance, especially at a time when insurance remains very affordable.
4. Use new technology to budget, save and build your finances
Technology advancements have given way to resources never available to generations prior. Tools like banking and savings apps, automatic deposits and transfers, digital payments and self-service brokerage options all make it much easier to track income and ensure you’re spending, saving and investing wisely. In fact, when it comes to managing a budget, 34% of people ages 18-34 say they already have at least one budgeting app on their phone, according to Bankrate. Put those apps to work! While many people find that nothing completely replaces the value of advice from a financial professional, technology is one part of a holistic financial strategy.
5. Convert money into meaning
Financial wellness isn’t just about amassing valuable assets; rather, it’s using your finances in a way that helps you live a life full of value. Increasingly, we’re seeing millennials value experiences over “things.” And there’s a growing body of literature that suggests that financial and physical health are often intertwined, making financial wellness a core part of your overall well-being. Taking stock of not just objective financial health — what you own, what you owe, how much you are earning — but also your subjective financial health — how well you see yourself managing your finances, and how optimistic or pessimistic you are about achieving the financial goals most important to you — creates the building blocks to financial wellness. Use a financial self-analysis as an opportunity to ensure you are finding meaning and value in your life as a whole, and assess how your finances can help play a role in furthering the activities and moments that you value most.
While the financial wellness journey is not without its hurdles, millennials have the tools and the mentality to adapt financial wellness strategies to meet today’s realities and future demands. Adopting these strategies can allow for less stress over what might be coming, and allow for better preparation for the future.
The Prudential Insurance Company of America, Newark, NJ.
1039889-00001-00
-
The Retirement Bucket Rule: Your Guide to Fear-Free SpendingForget market declines or rising inflation. With this strategy, you won’t have to worry about any of that during retirement.
-
How Big Will the Fed Rate Cut Be This Fall?A dismal July jobs report has lifted expectations for fall rate cuts. But just how low could the fed funds rate be by year's end?
-
Five Ways to Maintain Charitable Giving During Volatile Times: A Giver's GuideWhen the economic outlook is uncertain, charitable giving is even more important — and impactful. You can be strategic by using donor-advised funds, diversifying assets and prioritizing unrestricted gifts.
-
Avoid Medicare's 'Shadow Tax' With This Financial Expert's IRMAA-Busting TipsYou're cruising along in retirement, and then bam: Your Medicare premiums soar because your income crossed the limit. Take a breath. There could be a solution.
-
Grilling Season and ETFs: There's More Than One Way to Cook Up a PortfolioExchange-traded funds come in a multitude of 'flavors' these days, from passive to active to factor-based. Their flexibility is what makes them so delicious.
-
You Don't Want It, But You Should Plan for It Anyway: An Expert Guide to Long-Term CarePlanning for long-term care is crucial to protect your independence, family and financial stability against unexpected health events and rising care costs not covered by standard insurance.
-
Five Questions to Help Ensure a Happy, Secure RetirementYou need to drill down to what you really want out of retirement. Then you can get down to the business of crafting a financial plan to make it happen.
-
I'm a Financial Adviser: This Is How You Can Save for Big Goals Even if You Feel Like You're Barely Getting ByLearning good financial habits — building an emergency fund, paying down debt, saving consistently — gives you flexibility, options and a path to security.
-
How to Buy an Annuity Online (Without Regret)You should never be rushed into buying an annuity. But now that they can be sold quickly and easily online, you need to be more alert than ever to pushy salesmanship. Here are four signs you're working online with a professional.
-
How Much Income Will an Indexed Annuity Get You? An Annuities Expert Lays Out the NumbersGuaranteed lifetime income sounds great, but how much will it be? Several factors determine your future payout on indexed annuities with an income rider.
