How Gen Y Can Stop Fearing the Financial Future and Start Preparing
What Millennials Fear: Financial Uncertainty
When reading Allison Bell’s article, 7 Statistical Snapshots: The Millennials, over at LifeHealthPro.com, I found Point #3 to be particularly interesting:
Good news for insurers and agents: Employees who are part of Gen Y are very concerned about the effects of unforeseen events affecting family financial security.
- 54% fear employee premature death
- 65% fear the possibility of an occurrence where a principal wage earner is no longer able to work because of disability or serious illness
- 63% fear extra costs not covered by medical insurance that result from a serious illness
- 72% fear having enough money to pay bills during a period of sudden income loss
Well, that rings true. Job loss is a big concern among many of my friends. More of my peers waited to leave jobs, even ones they hated, until they were positive they had something else lined up. Very few are willing to take the leap without something in place. Others are worried about health care costs, even healthy friends, particularly if they don’t have health insurance. I haven’t heard too many of my peers verbalize concerns about dying, but then the majority of my friends are still single or recently married, so there isn’t the “who will take care of the family if I’m gone”-worry setting in yet.
So Are Millennials Planning Ahead?
What I found very interesting was that this information was followed by Point #4, which asked whether or not millennials are planning ahead.
Most aren’t.
You’re not surprised. Neither am I. For whatever reason, despite our generation’s fears and anxieties about our financial futures, very few of us are preparing for them. Not enough young people are saving; not for the short-term, not for the long-term. Note these stats from this article pulling out some key points of the 2012 Retirement Confidence Survey:
- Only 66% of workers report saving for retirement (down from 75% in 2009);
- Even among retirees, only 68% have ever saved for retirement;
- The percentage of workers who are currently saving for retirement is just 58% (down from 65% in 2009);
- Sixty percent of workers have saved less than $25,000
- Thirty percent of works have less than $1,000 saved
Millennials, now is the time. With a little help, saving for retirement and putting aside a small emergency fund doesn’t have to be that painful.
Ok, I’m Ready! But…Um…What do I Do First?
Questions about where to start? Whether you should save or pay down debt? An excellent blog post just came out to address this very question. Rob Berger over at Doughroller has a lot of good stuff to say in his post Should You Pay Off Debt or Save for Retirement? It’s a short article but the advice is solid. Remember, every circumstance is different, but he offers a good plan for answering the question “where do I start?”. His suggestions:
- Invest in a 401(k)/403(b) up to employer match. Why? It’s free money!
- Start your emergency fund (this is where you start if you’re employer offers no match). Plan for at least 1 month of expenses (personally, in this economy, I say strive for 3 months if you can).
- Pay down credit card debt
- Once all the steps above are complete, take a balanced approach to debt repayment and savings
He acknowledges that not everyone agrees on #4, and you have to make the decisions that are best for you. But there’s something to be said for balance. Yes, pay down the debt…start with the debt that has the highest interest rate (car before student loans) but also take time to set aside funds for retirement and other money to build up your emergency fund to the 6 months of expenses level.
I’ll say it again – everyone is different with different financial situations. But Millennials, look at the numbers. The majority of us are anxious about an unsound financial future yet we do nothing to prevent it. Listen, you can do it. You CAN do it. We can do it. And given all the resources online (personal finance resources are all over social media – I’ll pull together a list for you of some of my favorites in a future post), you can find plans that work for you, that make it easier.
What About You?
Do you worry about your financial future?
Have you started preparing for the future financially?
What steps have you taken to make your financial future sound?
How do we get more Millennials to start preparing now?!
Image Credit: Keith Ramsey at Ramberg Media, Flickr
