If you’re a millennial who doesn’t have crippling student debts, you’re lucky. According to a CNBC report, nearly two-thirds of millennials are living off their paychecks, with only 38% feeling financially secure and stable. In addition, millennials are also the generation that’s most insecure about their finances, compared to baby boomers and Generation X individuals.
Skills such as credit building, debt management, and financial literacy are all vital to surviving in the real world. Even though around 86% of millennials are saving, only 37% say they have financial plans. The additional problem of student debt also means millennials are delaying milestones in life, such as starting a family or buying a house, because of loans and payments.
Another report says that the number of student borrowers has increased by 89% from 2004 to 2014, with average student debt growing at 77% and a third of working millennials still in debt.
Millennials are also realizing that they need other provisional options for retirement, with the average American life expectancy to increase almost 10 years. Millennials who plan to retire at, say, age 65, may rely on their Lockheed Martin 401k plans or their personal savings lasting years.
How Millennials Learn
In order to become more financially secure and aware, understanding how millennials absorb information can help provide the resources they need in order to learn more.
Since millennials are often associated with technology, they have developed a DIY mindset by asking questions online. Mobile access has also allowed payments, money transfers, and investments done easily. Mobile applications also allow millennials to budget and keep their finances on track.
Millennials also want to understand the reasons of doing a task, especially if it is relevant or has good long-term benefits. Focusing on life events and milestones may help millennials see the importance of financial planning, by showing long-term benefits and relevance.
In order to achieve this, millennials seek personalized advice on decision-making and financial planning. If any idea becomes too overwhelming or complex, breaking down information can also help millennials learn better and make financial education more enjoyable.
The Role of Advisors
Millennials are very split on banking and the need for sound financial advice. As they enter their earning years with a lack of confidence in financial knowledge, guiding and advising millennials can be done through the following.
- Focusing on creating content revolving around life milestones and how financial decisions affect them
- Hosting relevant topics or 101 sessions in seminars, which can be experienced with friends and peers
- Creating a checklist that can help them navigate important life decisions
- Translating financial principles into practice and transferring strategies into real-life situations
- Acting as partners instead of providers to not only increase trust, but also empower millennials with knowledge and guidance to help make the right decisions in the future
With student debts and the clock ticking, the importance of financial planning and literacy can’t be emphasized more. Knowing basic personal finance and seeking guidance from advisors can aid millennials in securing a better future.