Millennials: Ditch your assets and take charge of your financial life
Millennials, of course, want to take charge of your financial life. Financial freedom is what most people want. Can you imagine not worrying about money? You will have enough savings and investments. You won’t have to worry about an emergency creep you can’t cover. You will know that you have a savings plan for your retirement. I can almost hear your sigh.
Millennials, you are a resilient, intelligent generation that has struggled with debt, unemployment, pandemic fears, and other frightening economic situations. Now you’re going back in time, experiencing almost full employment, on your terms. You can also get a financial plan that will allow you to sleep at night…but you have to spend as much time focusing on that as you would choosing a trendy restaurant.
There is also another challenge facing you. Inflation is in your face, which is real. Every time you get in your car, stop to shop, or grab a bite to eat, you’re reminded that everything costs more. You can easily see the big things that affect you financially: credit cards and mortgage rates are going up; The stock market is going down. And you can now Not Get the big login bonus. But what about the little things? Do you spend your money where you want? Are there areas of that drip, drip, drip of your money that leak away that you don’t really focus on?
Small expenses can creep up that you weren’t even aware of. For example, C+R Research just conducted a study that revealed that nearly half (48%) of all millennials have forgotten subscriptions they no longer use but still pay for, versus 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 they were spending $219 a month.
These small expenses can add up.
How smart are millennials about money?
An Investopedia survey found that “Millennials said they understood investing the most, with 44% reporting advanced knowledge of the topic. Generation X followed closely (37%), followed by Generation Z (31%) and Generation 2 (26%).” Notably, the survey found that nearly half of the respondents said they had only a novice understanding of digital currencies, such as cryptocurrencies, blockchain, and NFT.
Millennials are very self-sufficient, and many choose self-managed investment platforms (45%) instead of financial advisors. You invest and also use the internet to buy and invest in cryptocurrencies. You are a digital generation, looking for advice online, from vehicle selection to financial products. But I would argue that you also need human contact and advice when it comes to your money. Money is personal and emotional and carries a lot of family baggage. Financial planning decisions aren’t as simple as buying the latest digital device or choosing a vacation spot with the tap of a button on your phone.
I searched for a company that can offer financial training in both low touch digital experience and high touch Experience personal interaction with a real person. Technology alone is not enough. We’ve seen it through exercise, weight loss, and general health. Why not be the same for the money?
I found OneEleven, an app for financial education and wellness. I am now a consultant for the company. OneEleven partners with leading companies that want to increase employee engagement and reduce employee turnover. They guide their members, help them set goals, and encourage them as they work with real human trainers who support participants to achieve their goals. I also like OneEleven’s approach to helping people set goals and then take small pieces to achieve them.
I tell Danny Pascarilla, founder and CEO of OneEleven, that I look at achieving an individual’s financial goals the same way I look at cleaning the house. Of course, my goal is to have a clean house. If you ask me to clean my entire house, that will never happen. But if you tell me to start with the sock drawer, that’s an achievable goal, and I’m on it.
There is a lot of financial information out there. I asked Pascarilla why she feels that OneEleven is different. She told me she “set up the company to help millennials change their relationship to money — forever. Seventy percent of millennials live paycheck to paycheck, and money is the biggest stressor for our generation. But it doesn’t have to be. It’s possible to combine technology with real coaches.” To inspire people to be responsible for their behavior and achieve their goals. I want our members to feel confident about their finances and reduce their stress. They can do this in just minutes every day, straight from a mobile app.”
Your bad habits can cost you too
Your FICO score gives creditors a glimpse into how to manage your financial life. Your payment history makes up about 35% of your FICO score. Creditors want to know things like: Are you paying your bills on time? Are you carrying a lot of 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.
- See your credit score: If you’re considering buying a new home, car, or even furniture, a poor FICO credit score can cost you real money, or even prevent you from buying these things. FICO scores range from 300 to 850, or 250 to 900, depending on the enrollment form. To demonstrate the impact your FICO score can have, for example, you’ll need at least a 580 credit score if you want to buy an FHA-approved mortgage home. A score between 660 and 700 is considered good. If your score is above 700, you can be sure that lenders will view you favorably. According to MyFICO, the annual percentage rate (APR) on a mortgage can vary widely depending on your credit score. The rate can be more than 1.5 percentage points. It may not seem like a big deal, but when you look at this over the life of the loan.
- car insurance: A bad driving record can increase your car insurance costs – if you can even get car insurance. Depending on the specifics, according to a study by QuoteWizard, if you have speeding tickets, accidents, or DUIs on your record, your insurance rates could increase by 26% to 75%. That could mean an extra $300 a month, versus an average of $176 a month for those with a clean driving record.
- Services: If you don’t have good credit, utility companies may require you to pay a deposit when you first set up the service. You may have to prove that you paid on time before they release you.
- life insurance: Besides your health history, insurance companies may look at your credit history as well. A bad credit score may not prevent you from getting insurance, but it may 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 of around 620, because you filed for bankruptcy, for example, you may only qualify for a standard rate. That could mean hundreds of dollars a year, which would be collected.
Good money habits can help you achieve the life you design. But on the contrary, bad money habits can create a life that is out of control and full of stress. Consider your spending and really examine whether your spending will bring you the long-term happiness you desire. You don’t want your life to look like a famous Will Rogers quote: “Too many people spend money they don’t earn, to buy things they don’t want, to impress people they don’t like.”
President and CEO, Children’s Financial Network Inc.
Neil Godfrey is the author of 27 #1 New York Times bestselling books that empower families (and their children and grandchildren) to take charge of their financial lives. Godfrey began her journey with The Chase Manhattan Bank, went on to be one of the first female CEOs, and later became President of The First Women’s Bank and founder of The First Children’s Bank. Neil pioneered the topic of “Kids and Money,” which took off after her 13th appearance on The Oprah Winfrey Show. www.nealegodfrey.com