Millennials Focusing on Financial Security
With such a large portion of that generation working paycheck to paycheck, or in fields of business that are unstable, the idea of investing for down the road is not at the top of mind.
Many millennials face a tricky dilemma: They are earning an income and don't have a clue how to invest in their own future. With such a large portion of that generation working paycheck to paycheck, or in fields of business that are unstable, the idea of investing for down the road is not at the top of mind. Instead it's all about making enough to pay the rent every month or lower their student loan debt before their interest rate goes up again.
A recent study from Fidelity echoed these thoughts, showing that a large number of millennials worry about their finances, yet many don't know who to trust to guide them through these problems. As that sizeable generation becomes more of a presence in the working world, and the U.S. economy continues its ascent following the financial collapse of 2008, planning for the future will rise in importance for millennial workers.
Unlike older generations, where finances were more mapped out based on age, many millennials face uncertainty. The economic crash put a large amount of people out of work or in jobs they were overqualified for given their college education. Meanwhile, the housing market changed, impacting how quickly that many went from living with families to out on their own, or from renting to buying. All of these changes affected how millennials saved their money, said Kristen Robinson, senior vice president at Fidelity.
"Feeling financially 'on their own' about finances also could be fallout from the Great Recession, since many Gen Y-ers witnessed their parents and grandparents struggle with the impact of job losses, tighter budgets, and/or declining retirement accounts," Robinson said in a press release. "Whatever the reason, this generation fortunately has a big advantage the luxury of time, as nothing is more powerful than the impact of saving early and often."
Fidelity found that nearly 40 percent of millennials - which the investment company defines as people born between 1980 and 1989 - worry about their financial futures at least once per week. Meanwhile 23 percent of people in that age bracket stated they trust "no one" in terms of giving financial advice.
Promising signs on retirement savings
There is good news for millennials, however. Many of the younger members of the generation are still early in their professional careers, meaning they have plenty of time to begin saving for their future. The key to that is having a budget and sticking to it. Certain funds go towards necessities like rent, groceries and car payments. But every month, some of the income earned can be tucked away in a retirement fund or long-term savings account, so that in a few decades, there will be some money waiting.
A 2015 survey by The Principal Financial Group found that millennials are doing well budgeting, and that many have given their futures a great amount of thought . The study found that two-thirds of people in the age group do create a personal budget every month. Even better, 63 percent of respondents stated they have begun investing some savings for their retirement, a rise over the 47 percent of millennials who stated in the Fidelity survey they had a retirement plan.
As more young people begin to plan for their future, the hope is that they can reduce their economic worries by finding a trustworthy source to consult with if they have any financial problems. Those in Colorado can visit their local Vectra Bank branch and talk with a professional, who can help answer and questions and walk through the procedure of setting up a retirement fund.