Young adults are pretty optimistic about their financial futures. According to a recent survey from financial firm Charles Schwab, 76% of millennials and gen Z between the ages of 16 and 25 believe they’ll be better off financially than their parents. Maybe it’s because of the side hustle trend or because 81% of them also witnessed their parents suffer financial hardships during the Great Recession. Regardless, the survey found that young adults are pretty interested in their finances, and we couldn’t be more proud.
However, this optimism may be shortsighted. According to the survey, millennials between the ages of 21 and 25 have 169% more debt than gen Z (ages 16 to 20). Plus, when comparing the same groups, these millennials only have 15% more money saved than gen Z.
Unsurprisingly, this trend may be due to the massive amounts of student loan debt that so many millennials are saddled with. Unfortunately, though, 51% of respondents said they have some sort of debt, but only 3 percent would pay it down if they were given an extra $1,000 right now.
So are young adults smart in being optimistic, while not yet financially stable? Eighty-one percent want to buy a home one day, and the average respondent believes they’ll be able to retire at 60 years old. Both of these goals are great, but young adults may need to be a little more realistic in planning for their futures right now.
Thankfully, the majority want to better informed when it comes to their finances. The survey found that 71% of young adults want to learn more about making enough money to reach their financial goals, 68% want to learn how to keep financial information secure, 65%want to know how to save enough for retirement and how to budget for necessities, and 55% want to learn the difference between good debt (i.e. a mortgage) and bad debt (i.e. credit card).
For starters, young adults can do the following five things to improve their financial situations right now.
1. Create a budget. Start by making a simple one in GoogleSheets to better understand your money.
2. Pay down student loan debt. Some have paid their loans off fast. See what you can do to cut that repayment time in half.
3. Consider investments. Let your money do some of the work for you.
4. Save for retirement. If you have access to an employer-sponsored retirement account, it’s easier than it seems to save.
5. Boost that credit score. Build your credit and maintain a good score so you can gain more financial freedom.
Once you get a good grasp on your finances, keep working hard to manage that money like a boss. And if you’re already killing it in your personal finances, share your tips and tricks in our LinkedIn Group!