If we are being honest, we have gotten a bad reputation as Millennials. We have been called everything from spoiled to entitled, and while some of these things may be true, I am proud to see more Millennials taking the steps to be financially empowered.
According to CNBC, Millennials are very frugal these days. So frugal, in fact, that experts are worrying it could pose challenges for the stock market and the retail industry.
With a less than stellar economy, members of Generation-Y are leading more financially conservative lives. Millennials are taking a very proactive approach to their careers, but shunning big ticket purchases and keeping their money in cash.
Millennials are not behaving like spoiled brats, but more like depression-era grandparents. It’s exciting to see a generation breaking stereotypes and taking steps to be financially responsible, independent and empowered adults.
1. Get An Open Mind
In order to be financially empowered, you have to understand that budget is not a bad word. I have learned that if you don’t keep a budget, you won’t keep any money. You need a clear system to track every dollar spent; this holds you accountable and allows you to assess your true financial state more accurately.
Any person who refuses to budget is not serious about changing his or her financial situation.
2. Eliminate Debt
Financial empowerment requires that you eliminate debt. According to Bloomberg, the average college student comes out of college owing around $30,000 in student loans.
We are in a terrible economy for new graduates, and Millennials have to settle for jobs with much lower salaries than they need to make ends meet. This makes for much less disposable income and leads to young people only making “necessary” purchases.
Research from The Motley Fool finds that Millennials spend 16 percent of their income on credit card debt. Find ways to pay down your credit card debt and do what you can to stay on top of student loans. Debt is burdensome, and your first goal should always be to eliminate it.
3. Get Into The Mindset
Financial empowerment requires a saver's mentality. While many believe that this is a generation of consumers, research proves that this generation is better at saving than the previous one.
In fact, 60 percent of Millennials are saving for their own retirement, with more than half of these people putting away 6 percent or more of their incomes.
4. Know Your Stuff
Financial empowerment requires increased financial literacy. As someone with a finance degree, I feel that financial literacy is something that is greatly lacking in this generation.
According to the Investor Education Foundation, only 24 percent of Millennials were able to correctly answer four or five questions on a financial literacy survey. Even more troubling, only 18 percent were able to answer all the questions correctly.
I was amazed at how many college students had no clue about debt, credit scores or even saving for their futures. I believe that our education system is doing this generation a great disservice. If we want to produce a financially empowered generation, we must increase financial literacy.
5. Learn To Invest
Financial empowerment requires investment. While saving is a great habit, this generation lags when it comes to investing. Saving alone will not produce the financial results you desire; investment is the vehicle for creating wealth.
Only 59 percent of Millennials believe that the stock market is the best place for their retirement savings. Sadly, only 30 percent say less than one-fourth of their savings is invested in stocks and mutual funds.
With that said, this generation lacks confidence in the stock market and dividend stocks crush non-dividend paying counterparts. Millennials must save and invest if they want to be financially empowered and secure.
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