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How Millennials Can Save More Money

Several strategies can help grow savings for retirement.

The Great Recession is still having an impact on millennial savings.

 

According to BusinessInsider.com, millennials are behind financially after the financial crisis forced them to face job shortages and wage stagnation (they actually make 20% less – after inflation adjustments – than Baby Boomers did at their age, according to the website). Those effects, combined with a higher cost of living and student debt, have millennials behind in terms of their overall financial savings.

 

To help grow millennials’ average savings, increase financial stability, and contribute more to their retirement savings, this generation needs to pay off their student loans, contribute to savings accounts and participate in better financial planning to account for increased living expenses.

 

Find out about helpful millennial savings habits below.

 

Millennials Should Try To Pay off Student Loans

As the most educated generation, millennials have accumulated student loan debt that is hindering their overall financial success.

 

According to FoxBusiness.com, the nation’s student debt total has surpassed $1.5 trillion – the highest total in U.S. history. This has kept many millennials from reaching financial milestones the website reports.

 

To pay off their debt, FoxBusiness.com suggests taking the following steps:

 

  • Pay Small Balances First - A large loan sum can seem daunting. To make positive progress toward paying off their debt, Fox Business suggests paying off the smallest balances first. Citing research from Northwestern University’s Kellogg School of Management, Fox Business says doing this will make borrowers more likely to pay off their entire debt balance.
  • Pay More Than the Minimum - To lower their balances, FoxBusiness.com recommends millennials pay more than the minimum payment due each month. This will help them take extra money off the overall debt, in addition to paying the interest.
  • Earn Extra Income - According to the website, millennials should use their current talents and assets to make extra money to put towards their debt. Some suggestions include blogging, taking side jobs (like being a driver) or renting out their homes to vacationers.
  • Reward Yourself - FoxBusiness.com suggests that millennials celebrate every time they pay off a bill. This can be done by going to a nice dinner, seeing a movie or buying a special treat – like a specialty coffee drink. By rewarding themselves they are marking the occasion and celebrating their hard work.
  • Set a Timeline - Millennials should set a date for when they want to be student-debt free, the website advises. This should be written down and placed somewhere they can see it as a reminder of their goal.

 

Millennials Should Create Savings Accounts

To create a financial cushion, millennials should revisit their savings habits and start contributing to savings accounts.

 

According to CNBC.com, millennials’ average savings are very low. The website, citing the 2017 GoBankingRates survey, states that 61% of older millennials (defined in the survey as ages 25 to 34) had less than $1,000 in savings. The same survey found that 41% of the participants had no money saved at all.

 

Starting a savings account and forming a strategy can help. Look for savings accounts that earn interest or will automatically deposit into savings from your paycheck.

 

How Much Should Millennials Save?

 

There are two things to determine when considering savings: How much money should millennials have in savings, and what amount should be in their retirement savings accounts? The answers can vary, but, according to CNBC.com, the amount can depend on the person’s age. Here are some general recommendations:

 

  • Age 30: Have the equivalent of your annual salary saved. This can include money in a 401(k) plan.
  • Age 35: Have twice your annual salary saved, including money in a 401(k) account.
  • Age 40: Have three times your annual salary saved, including 401(k) contributions.

 

CNBC.com also recommends that millennials have an emergency savings fund of up to three to six months of their living expenses. This can help in the event of an emergency, or if they are suddenly left unemployed.

 

Millennials Should Create a Financial Plan

To improve millennials’ saving habits and pay down their debt, they need to create a financial plan to account for their spending needs.

 

USNews.com states that millennials face a number of competing financial priorities and goals that financial planning can help organize. These can include student loans, retirement savings and savings accounts – as well as saving to buy a house and other large purchases.

 

According to USNews.com, the ideal financial plan will account for immediate financial needs as well as long-term financial goals.

 

If millennials need assistance creating a financial plan, they can seek the help of a financial advisor.

 

Find Help To Grow Your Savings

To establish financial stability, millennials should enhance their savings. They can accomplish this by paying down student debt, creating a savings account, contributing to a retirement savings fund and establishing a financial plan.

 

Cadence Bank can help millennials and their families set and achieve their financial goals through a full range of financial solutions.

 

For help getting started on your savings, contact Cadence Bank today.

 

 

This article is provided as a free service to you and is for general informational purposes only. Cadence Bank makes no representations or warranties as to the accuracy, completeness or timeliness of the content in the article. The article is not intended to provide legal, accounting or tax advice and should not be relied upon for such purposes.

 

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