The following is a guest post from Erin, founder of BrokeMillennial.com. She uses sarcasm and humor to explain basic financial concepts to her fellow millennials. Erin lives and works in NYC where she’s always looking to score — a deal.
What is the greatest financial concern for people in their 20s? What are their unique challenges?
My greatest concern is retirement. Yes, millennials face an unprecedented debt-load, largely due to student loans and amassing consumer debt at a young age but that isn’t my concern as much as the apathy towards saving and investing. People reading this might be shaking their heads in disagreement, but you’re on a personal finance website so clearly the desire to better yourself – financially – is higher than the average Joe (or Jane).
I’m amazed at how many of my peers either don’t contribute to their employer’s 401(k) programs that offer a match or hesitate about putting money into an IRA. Socking your money away in a bank account with an incredibly low interest rate isn’t going to help save to retirement (unless perhaps you’re pulling in millions or create the next SnapChat).
I wrote a satirical piece about this lack of enthusiasm for anything related to investing on my site called A Love Letter to Millennials, From The Stock Market.
What is the greatest opportunity for people in this age bracket?
Time. Time. Time and oh yeah, time. The earlier you start investing the better off you are thanks to the glories of compound interest/growth. You also have more time to withstand the inevitable tumbles the market will take.
Are millennials better or worse prepared to navigate their financial future than their parents? Why or why not?
I’m unconvinced there is truly a right answer. Millennials are saddled with more debt, pensions are a thing of the past and job security almost an antiquated notion. However, this uncertainty has bred a generation of entrepreneurs, freelancers and go-getters. We’re facing a different set of challenges, so we’re learning how to navigate our financial futures in a unique way. Perhaps the debt loads will help people make shrewd financial moves at a younger age or maybe we’ll still be slaving away for “the man” until our mid 70s. Only time will tell!
Neal’s Note – Here’s a short video to help people in their 20s take control of their finances. I think you’ll find it helpful.
Are people in their 20s interested in personal finance?
Well, I certainly am! I wouldn’t say a great love of personal finance is common in 20-somethings, but millennials do seem far more open in talking about finances than the generations before us. Money seems to be a far less taboo subject which can only mean good things for financial literacy in the future.
What is the best way for parents to help their children at this stage of life and before they get there?
Cut your kids off parental welfare. Support your child all the way through college and the following years isn’t empowering. It creates a lack of responsibility and a dependence on the Bank of Mom and Dad instead of learning to generate an income. Kids who live at home should also be paying rent or be a productive member of the home ecosystem in some other way. If you don’t need your child’s money, then consider socking it away until he or she leaves the nest and present it to them as a security deposit for an apartment or a nest egg to start their independent life.
The best way to help your child from a young age is to start introducing financial concepts and financial responsibility early on. By teaching a child to understand money, it starts to take the fear and intimidation factor away. Financial literacy is a beautiful gift to pass on to the next generation.
Thanks Erin! Great insights and a lot of fun. What other concerns do millennials have? What are they missing? I’d love to hear your thoughts on the matter.