Top 4 Financial Concerns for Millennials/Young investors
Financial literacy is important at any age. When you are young, having a good understanding of how to manage your finances will set you up for success – however you define that - in your later years.
Here are the top 4 financial concerns for young investors today.
Student debt
The cost of a college education is steep. Many young people are coming out of school with crippling student loan debt. Is it worth it? Try to pay a little extra each month as that can reduce the amount of interest you are paying and reduce the total cost of your loan over time. Continue to make monthly payments, even if you’ve already made future payments, to try to pay off your loan more quickly. Having less debt can help you in other situations, such as applying for a mortgage.
Price of real estate/cost of rent
Increasing rent costs can be daunting. And, as a renter you are at the mercy of your landlord, who can increase your rent at any time, and you can’t make any permanent changes to the property without the landlord’s approval. Perhaps the biggest disadvantage to renting is that when you make those monthly payments you aren’t building equity. It’s not all bad, though, as renting does allow you flexibility to leave a job on a whim or take time to travel. Still, at some point you might want to own your own home so saving for a downpayment is something you’ll want to think about. If you're looking to get a mortgage, a smart way to buy a home is to save up at least 25% of its sale price in cash to cover a down payment, closing costs and moving fees. So, if you buy a house, apartment, or condominium for $250,000, you might pay more than $60,000 to cover all of the different buying expenses.
Investments/ Saving for Retirement
A 2022 Investopedia survey indicated that while Millennials are stressed about money, they are also proactive about investing with 64% of those surveyed favoring cryptocurrency (38%) and stocks (37%) the most. 1
Life Insurance
Life insurance provides financial security, helps to pay off debts, helps to pay living expenses, and helps to pay any medical or final expenses. It’s generally recommended that you take out life insurance before you reach your mid-30s because after that time, monthly premiums can start to increase, and your age means you may be at a higher risk for health problems.
Caring for aging parents
Renting means they can leave a job and move to another city on a whim, save up, and then take a few months off to travel, or quit a job to start a company. The American Dream does not always include buying a house, a nice car, and earning a high salary. It means being free to do what makes you happy.
One of the most important financial skills is knowing when to ask for assistance. We can help. Give us a call.
1 Huggins, T. (2022) Millennials: Financially confident but very stressed, Investopedia. Available at: https://www.investopedia.com/millennials-are-financially-confident-but-stressed-5224413 (Accessed: 10 May 2023).