There’s no question that Millennials are struggling more financially than generations past. Not only are today’s salaries and wages not keeping up with inflation, but young adults are stepping out of college and university with a whopping average debt of $37,000! Many have less than $2,500 banked for emergencies, and fewer Millennials are asking for a raise compared to those from the Baby Boomer generation (37 percent versus 48 percent).
The reason why today’s young adults may not be as successful with their finances is because they simply weren’t taught how to make and manage their money.
One 2018 study found that one-third of individuals between twenty-one and thirty-five years of age didn’t receive any advice from their parents on how to manage their money, while two-thirds stated that their parents never showed them how to increase their wealth beyond having a job. They weren’t taught the importance of investing and how to invest their funds wisely.
Here’s the good news: this is a fixable problem. With just a bit of discipline, anyone at any age can adopt financial planning and money management skills. Stay committed to the task and you can enjoy greater freedom from debt and ultimately a far better quality of life.
Start Them Young
Teach your kids that they possess valuable skills that they are entitled to be compensated for. Encourage them to look for opportunities to earn more money around the home, like helping out with the dishes, mowing the lawn, and folding the laundry.
When a child is old enough, suggest that he or she look beyond the borders of your property and come up with other income boosting opportunities. Some ideas include:
- Taking on a local paper route
- Hosting a community garage sale
- Offering their services (such as snow shoveling, dog walking, yard work, etc.) to others in the neighborhood
Kids will want to spend their money all at once. Rather than allow them to splurge all of their hard-earned cash, make it a teachable moment and encourage the next lesson (we’ll get to that in a moment).
Earn More as an Adult
The easiest way to earn more income is to earn more for your time at work. If you feel that your hard work should be landing you higher on the pay scale, make a list of these reasons and schedule a meeting with your manager to discuss a raise.
Climbing up the corporate ladder is another way to make more for your time. Some companies will pay for the courses necessary for you to move up to a higher position at work, and many offer in-house training for employees.
Side gigs are becoming an increasingly popular way to make some extra cash. Experience in graphic design, coding, transcription and writing are all great ways to earn a bit more from home. Others may enjoy being a driver for a ride sharing company, working as an independent food delivery employee, or delivering early morning newspapers.
Become a Wiser Consumer
The minimalist movement is in full swing and for a good reason: a lot of us have too much stuff. Many of us have gone into debt not only buying things, but because we need to pay monthly installments for additional storage space for these things.
Before you or your child purchases something, consider what else can be done with that money. Comparison shop and have a conversation about the importance of comparing prices and assessing the quality of a product.
This is also a great opportunity to teach children (and remind ourselves as adults!) about the power of advertising. Watch commercials together and talk about the marketing tactics used to try and persuade consumers that they need or want the product they see on the screen—even when they absolutely have no need for it.
Save and Invest
A good rule of thumb is to save at least 10 percent of your income every month. Start by having young kids stash it away in a jar or a piggy bank, and as they grow older open up a bank account and introduce the idea of investing.
Make an appointment with your chosen investment company for you and your child (you may want to schedule two separate appointments depending on how comfortable you feel with discussing your investments in front of your child). Here you can both meet up with an investment professional who will explain things like interest rates, rate of return, and financial risks. This way both you and your child can make the best decision together for how to save and invest.
Being financially savvy isn’t something that’s going to happen overnight, but it is something that anyone can learn over time. Choose to make financial management a habit every day and both you and your family only stand to profit.
For more tips and information on the subject, have a look at the following additional resources: