Millennials: Get Off Your Assets and Take Charge of Your Financial Life

A man in a suit sits in a bathtub as cash rains down on him.

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Millennials, of course, you want to take charge of your financial life. Financial freedom is what most people want. Can you imagine not having to worry about money? You would have enough savings and investments. You would not worry about an emergency creeping up that you couldn’t cover. You would know that you had a savings plan for your retirement. I can almost hear your sigh of relief.

You Are Finally Making Good Money. Now What?

Millennials, you are a resilient and savvy generation who have experienced debt, joblessness, pandemic worries and other scary economic situations. You are now roaring back, experiencing almost full employment, on your terms. You can also have a financial plan that lets you sleep at night … but you have to spend as much time concentrating on that as you do selecting a trendy restaurant.

Sneaky Inflation

There is also another challenge facing you. Inflation is in your face, and it is real. Every time you get in your car or stop off to shop or get a bite to eat, you are reminded that everything costs more. You can easily see the big things that are affecting you financially: Credit card and mortgage rates are rising; the stock market is falling; and you may now not get that big sign-on bonus. But what about the little things? Are you spending your money where you want to? Are there areas of that drip, drip, drip of your money leaking away that you are not really focusing on?

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Small expenses can even creep in that you have not been aware of. For instance, C + R Research just conducted a study that revealed that nearly half (48%) of all Millennials forgot about subscriptions they weren’t using anymore but still paid for them, vs. 24% for Baby Boomers. Overall, consumers send $133 more than they think on subscriptions each month. They thought they were spending $86 a month, but were actually spending $219 a month.

Those little expenses can add up.

How Savvy Are Millennials about Money?

A survey by Investopedia showed that “Millennials said they understand investing the most, as 44% reported advanced knowledge of the subject. Gen X follows closely behind (37%), followed by Gen Z (31%) and baby boomers (26%).” It should be noted that the survey found that almost half of respondents said they only have a beginner’s understanding of digital currency, such as cryptocurrency, blockchain and NFTs.

Millennials are very self-sufficient, and many are choosing self-managed investment platforms (45%) over financial advisers. You are investing and using the internet to also buy and invest in crypto. You are a digital generation, looking for advice online, from a car choice to financial products. But I contend that you also need human contact and advice when it comes to your money. Money is personal, emotional, and it carries lots of family baggage. Financial planning decisions are not as simple as buying the latest digital device or selecting a vacation spot from the click of your phone.

Enter OneEleven

I searched for a company that could offer financial coaching in both the low-touch digital experience and the high-touch experience of personal interaction with a real person. Technology alone is not enough. We have seen this with exercise, weight loss and general health. Why wouldn’t it be the same for money?

I found OneEleven, a financial education and wellness app. I am now an adviser to the company. OneEleven partners with leading corporations that want to increase employee engagement and reduce turnover. They guide and help their members to set goals and cheer them on as they work with real human coaches who support participants to achieve their goals. I also like OneEleven’s approach of assisting people to set goals and then take bite-sized pieces to achieve them.

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I told Dani Pascarella, founder and CEO of OneEleven, that I look at achieving one’s financial goals the same way I look at house cleaning. Of course, my goal is to have a clean home. If you tell me to clean my whole house, it will never happen. But if you tell me to start with my sock drawer, that is an achievable goal, and I’m in.

There is so much financial information out there. I asked Pascarella why she felt OneEleven was different. She told me that she “created the company to help millennials transform their relationship with money — for good. Seventy percent of millennials live paycheck-to-paycheck, and money is the biggest cause of stress for our generation. But it doesn’t have to be that way. It’s possible to combine technology with real coaches to inspire people to be accountable for their behavior and to reach their goals. I want our members to feel confident about their money and to reduce their stress. They can do this in just minutes per day, right from a mobile app.”

Your Bad Habits Can Also Cost You

Your FICO score gives creditors a glimpse into how you manage your financial life. Your payment history makes up about 35% of your FICO score. Creditors want to know such things as: Do you pay your bills on time? Are you carrying too much debt? Will you be a good and responsible customer? These questions will determine if they want to do business with you and how much it will cost you.

Watch your credit score: If you are thinking about buying a home or a car or even new furniture, a poor FICO credit score can cost you real money, or even prevent you from buying these things. FICO scores run from 300 to 850, or 250 to 900, depending upon the scoring model. To demonstrate the effect your FICO score can have, for example, you will need at least a credit score of 580 if you want to buy a house with an FHA-approved mortgage. A score between 660 and 700 is considered good. If your score is above 700, you can be pretty sure that lenders will view you positively. According to MyFICO, the annual percentage rate (APR) on a mortgage can vary significantly depending on your credit score. The rate can increase over 1.5 percentage points. It may not seem like a big deal, but it is when you look at this over the lifespan of the loan.
Car Insurance: A bad driving record can really increase your car insurance costs — if you can even get car insurance. Depending on the details, according to a study conducted by QuoteWizard, if you have had speeding tickets, accidents or DUIs on your record, your insurance rates could increase by 26% to 75%. That could mean an additional $300 a month, vs. an average of $176 a month for those with a clean driving record.
Utilities: If you do not have good credit, utility companies may require you to pay a deposit when you first set up the service. You may have to show that you have been paying on time before they will release that to you.
Life Insurance: Along with your health history, insurers may look at your credit history as well. A poor credit score may not keep you from getting insurance, but it can make your premiums more expensive. For example, if you have a FICO score of 750 to 850, you may be offered a preferred rate, and on the other hand, if you have a score around 620, because you filed bankruptcy, for instance, you may only be eligible for a standard rate. That could mean hundreds of dollars a year, which will add up.

Good money habits can help you to achieve a life that you design. But conversely, poor money habits can create a life that feels out of control and is full of stress. Be mindful of your spending and really examine if your spending will bring you the long-term joy you want. You don’t want your life to look like the famous quote by Will Rogers: “Too many people spend money they haven’t earned, to buy things they don’t want, to impress people that they don’t like.”

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Disclaimer

This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

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Neale Godfrey is a New York Times No. 1 bestselling author of 27 books that empower families (and their kids and grandkids) to take charge of their financial lives. Godfrey started her journey with The Chase Manhattan Bank, joining as one of the first female executives, and later became president of The First Women's Bank and founder of The First Children's Bank. Neale pioneered the topic of "kids and money," which took off after her 13 appearances on The Oprah Winfrey Show.