Millennials Savings: 7 Explanations for Why You Are Doing Poorly
Millennials savings in trouble.Over 50 percent of Millennials have less than 1,000 dollars in savings. If you are thirty years old, and you don’t have a substantial amount of savings, you might want to consider revising your budget strategies.
But no one can deny that it is hard to save money. With mounting debt from college loans and the difficulty in finding a stable career-track job, Millennials do not have it easy.But has it ever been easy to save money?
College Loan Debt
Of course, college loans have been available for a long time, but it seems that the number of people needing loans to pay their tuition has increased.
According to BankRate.com, “the percentage of heads of household under age 35 holding education installment loans has increased by 15.6 percent since 2001.”
Millennials Savings Have Decreased for 29 to 34-Year-Olds
Bankrate provides a startling set of statistics that show 29 to 34-year-olds in 2001 have an average net worth of 34,643 dollars while in 2013 this same group was worth 18,400 dollars.
In just 12 years, a group’s average net worth has decreased by more than 16,000 dollars! How does this happen? Of course, these figures are made even scarier by the loss of social security.
The obvious question becomes how will Millennials save for retirement? With figures like these, it seems doubtful that Millennials can save for retirement.
I Will Just Work on into My Retirement
Trent Hamm, writing for TheSimpleDollar, writes, “It is very likely something will keep you from working in retirement.” It could be your health or the health of a loved one. We can never be sure about where we are going to be the in the future.
But many Americans are gambling with their retirement. They are not making the decisions now, in their youth, which will save them time and effort later.
I believe it is part of the human condition to put off those things that are not pressing and immediate. But if you can change your way of looking at retirement, look at it as something you do every day rather than something that will occur later in your life, you will probably have a better shot at a comfortable retirement.
Thinking about retirement every day means thinking every day about setting money aside.
I Don’t Have Children…Yet
Children are expensive. Very expensive. Chances are if you are thirty years old you might not have children, which means that you are earning only for yourself and possibly your spouse.
But you should ask yourself, are you financially prepared to have a child now, with your current financial situation? If you are interested in having a child, as many people are, this is a question you should ask yourself.
You have to plan for their college fund, for the cost of diapers and food and doctor visits. It isn’t fair to bring a child into the world without being able to provide for that child financially.
What about a Retirement Account?
The number of retirement accounts has fallen and is still falling. For those under 35 years old, retirement accounts are becoming a thing of the past.
All the more reason to save on your own.
I Can’t Fit Savings into My Budget
There are many, many things you can do to save money, from turning off your appliances when you are not using them to switching out those energy-sucking light bulbs for newer, more efficient bulbs.
Read about ways to save money, and you will be surprised. Do you go out to eat more than once a week? Maybe you could scale that back a bit. If you and your friends often meet up at a restaurant, try to switch it up: make a dinner at your home and invite everyone over.
As Trent Hamm and Mike Jelinek from the Simple Dollar suggest, spend time figuring out where every dollar you earn goes. If you work away from your house, pack your lunch rather than buying your lunch from a restaurant each day.
What about Social Security?
The odds are, social security will cease to exist by the time Millenials reach retirement age. Even if social security does not disappear completely, it will have to change, and whatever changes take place will probably not be for the better in terms of retirement income.
Plus, consider what living on half of your income looks like. Is it even possible? What about potential health risks you may have when you are older?
These considerations may seem absurd now, but they are likely to happen, and the sooner you can plan for these possibilities the better off you will be both financially and emotionally.
Also, consider the fact that you probably will not want to work for the rest of your life. Work may become more stressful the older you are.
Why would you want to put yourself through these experiences when you can start saving now? The solution isn’t complex: start saving your money as soon as possible and you will be better off than if you had not done this.
A Positive Side
It isn’t all doom and gloom. Being young does have some financial benefits. For instance, factors such as automatic enrollment trick people into saving money.
Employees are signed up for financial savings plans, and they must opt out manually if they wish not to join.
According to a study conducted by Ann Hewitt, “Today, about 55 percent of plan sponsors automatically enroll employees in their retirement plans, and over a third plan to add automatic enrollment for new employees this year.”
Also, the best asset that Millennials have is their youth. With a solid forty years of time to save, they can start to save a little later than others before them have.