Bring Some Ideas for Your Finance
The recession has long gone and employment has halved since its peak, now standing below 5%. It does not mean that everything in the economy is fine and even among the millennials there are signs of hesitancy when it comes to investments. There are various reasons for that:
- Some 40% say they do not have enough spare money to invest even if they wanted to. There is a temptation for people to spend their income month by month without considering saving or investing while they are relatively young.
- Almost as many confess that they don't know how to. Financial management is not an educational subject after all.
- Most of the rest blame their current debts, often student loans but also credit cards, but they have not necessarily prioritised their settlement prior to beginning to invest.
The survey of 500 aged between 18 and 34 also found that females were less likely than males to invest. It may seem strange that there is a tendency among this age group to regard investments as something for older people. Certainly many financial advisers are 50 and over with plenty beyond normal retirement age. There appears to be few below 30 for no obvious reason.
One product that should be an introduction to investment as well as effectively beginning provision for retirement is a 401(k) which is a retirement plan that employers will contribute towards up to a certain figure. Such plans are the responsibility of individuals with no guarantees from employers. Their growth and performance is down to the owner of the plan and although they have performed poorly during the recession there is no reason why they should continue to do so. As the economy has improved so should the performance of most 401(k)s.
Pension plans offered by employers which guarantee a minimum pension to an employee on retirement have largely faded from the employment scene.
Millennials should ensure they have a 401(k) in place even if they have no interest in separate market investments. The sooner that people begin to save for their retirement the better. It makes sense to take advantage of the fact that employers will pay extra money to an employee never mind the tax advantages for the individual. Regular saving benefits from the growth that compound interest provides and the longer savings are allowed to grow the better their final fund will look.
Whether millennials have debt or not the future is important; depending upon the type of debt that some are carrying there may well be a cheaper way to settle it. That is certainly the case when it comes to credit card balances because they incur a high rate of interest. It is far cheaper to take out a personal loan which should be available to anyone with regular income so you should be saving dollars with 5000 with bad credit, whether their credit history is good or not. It is a matter of demonstrating the ability to repay the loan in full which means regular employment and income.
Millennials are a mobile generation. Another recent survey by Fidelity suggests that almost half are contemplating changing jobs in the next couple of years. There are still plenty of people who were just willing to cling on to a job during the recession so perhaps it is natural that so many are thinking of moving on, logically for advancement.
There appears to be a growing trend for everyone to seek a better work experience, questioning whether money is everything. Some who have chased money and position all their lives and are now middle aged and beyond appear to want more from their work than money.
Those in their 20s and early 30s left education and were soon confronted by the recession that obviously has had a major impact on their lives and their perception about what career paths they should take. They can obviously read that such recessions are fairly rare but their personal experience still weigh heavily on them.
While their reluctance to invest shows no sign of changing at present, it is to be hoped that it does in the future. Millennials have a great opportunity. They should grasp it with best advice being to think about financial management and resolve to plan for their future, right through to the time they finally finish work and begin a comfortable retirement.