4 Financial Education Resources All Millennials Need
Millennials are currently the largest and most educated generation in America. Because of their age and influence, this generation’s financial decisions will greatly impact the future of the U.S. economy. But, according to a study conducted by the TIAA Institute1, only 16% of millennials are seen as financially literate.
Financial literacy is a crucial step on the journey to financial wellness, and financially literate consumers can boost the economy while helping to combat societal poverty. So the ability of millennials to make smart money choices is not only important to their own financial health, but that of our communities.
Being financially literate can help millennials close the gaps in their understanding of money management, and equip them with the tools and knowledge to make sound decisions, especially regarding these considerations:
• Savings — Millennials should be actively saving money for short- and long-term goals. It’s important to maintain a savings cushion in case of emergencies. Setting aside at least three months’ worth of typical expenses is pivotal to achieving financial wellness.
• Budgeting — A realistic budget and the discipline to stick to it are crucial for money management. Create a plan to manage monthly expenses, everyday spending and an emergency fund.
• Loans — Millennials should be working to build and maintain a good credit score so they can take out loans for bigger purchases. Starting with a credit card that you fully pay off every month is a great way to begin improving your score.
• Mortgages — Taking out a mortgage is typically necessary to become a homeowner. Learning more about mortgages and how to shop for the best rates is key, since a house may be the biggest purchase you ever make.
• Retirement Savings — Nobody wants to work forever, but saving for retirement doesn’t happen overnight. It’s important to start saving at a young age, especially since Social Security may not exist in its current form by the time millennials are looking to retire.
In my experience, the biggest gaps in the financial knowledge of millennials relate to debt and emergency savings. Millennials are often heavily indebted due to some combination of student loans, auto loans, credit card debt, etc. Adding to the issue, many younger Americans don’t realize that borrowing against their assets can hurt them in the long run. For example, millennials may not know the penalty for early withdrawals from their 401(k) or understand how they are forgoing the benefits of compound interest.
Millennials are also often financially unprepared to handle sudden economic changes. Many don’t have an emergency budget, and if they do, it may not be enough to pay for more than a month's worth of expenses. In a 2017 NEFE study2, millennials were asked whether they would be able to spare $2,000 if an unexpected/emergency cost occurred. Alarmingly, nearly half (48%) of respondents said they probably or certainly could not afford the cost. Only 32% said they had enough money saved to cover up to three months of household expenses. In addition, nearly 30% of the respondents with bank accounts had overdrawn their account within the previous 12 months.
For millennial (and all other) members, Affinity Federal Credit Union offers various resources to help achieve financial literacy, while learning how to save in ways that work for them. Four of these tools include:
1. Enrich is a personalized online educational platform that contains modules, articles and tools to learn about money management, personal credit, insurance, retirement and other topics that are important to master in order to reach financial goals.
2. Kofetime, an additional online educational platform, provides financial guidance through interactive courses, webinars and money-saving tools that enhance the user’s ability to establish a savings plan for the future.
3. Our Events & Seminars page gives members access to live webinars where experts cover various financial topics such as budgeting, credit, identity theft prevention, investments and more.
4. Consumer Credit Counseling Services, offered free of charge via Navicore Solutions and Consolidated Credit, are provided through meetings with a financial coach who can help members understand credit and set up financial strategies.
No matter where our millennial members are on their individual paths to financial literacy and wellness, Affinity offers the expertise and resources to help fill the gaps in their knowledge. Smart financial decisions will lead to less stress for members, while benefiting our greater communities as well. Don’t hesitate — utilizing these resources will bring you one step closer to reaching your financial goals.
This information is for informational purposes only and is intended to provide general guidance and does not constitute legal, tax, or financial advice. Each person’s circumstances are different and may not apply to the specific information provided. You should seek the advice of a financial professional, tax consultant, and/or legal counsel to discuss your specific needs before making any financial or other commitments.
1 Retrieved From: TIAA Institute_Millennials and Money_T&I_Lusardi_02 20.pdf
2 Retrieved From: https://www.nefe.org/news/2017/02/millennials-show-alarming