It seems like Millennials will be needing a lot of financial tips right now. We are all going through difficult times – with the economy being on the edge of a global recession because of the coronavirus. To help curb the spread of the pandemic, experts encouraged everyone to stay at home. This caused businesses to stop operations.
And it led to people losing their jobs. In fact, reports reveal that 10 million Americans filed for unemployment insurance by the end of March. Although they will be qualified to receive benefits to help sustain their households during the financial crisis, we all know it is not enough. Even if you are also qualified to receive the stimulus check coming from the government, it will not sustain the standard of living that we are used to.
This puts a lot of Americans in a tight financial situation. And do you know who seems to have it worse? Millennials. We are all suffering, that’s for sure. But it is the Millennials who will most likely struggle the most. This is why they will be needing a lot of financial tips to help them survive this economic crisis.
Why Millennials need the most financial tips during this time
There are three reasons why Millennials will have a tough time during these trying times.
They started their careers on a shaky economy
First of all, this is not the first recession they encountered. It’s the second that affected their careers. At the start of their career, they faced the Great Recession. This left them with minimal employment opportunities. They borrowed a lot of money to complete their education. But when the time came for them to find a job to repay that, they faced a high unemployment rate caused by the 2008 recession. That left them with a very shaky start in building their personal net worth.
They don’t have financial security
Another reason why Millennials will be in need of financial tips is that they are not financially secure. For one, they have not saved enough for retirement. In 2018, a study revealed that 66% of working Millennials are not saving for their retirement. The study revealed some of the causes – like their wages or the lack of opportunity to access retirement plans offered by employers.
There are other missed opportunities like delayed homeownership and investments. The longer these are delayed, the longer it will take for Millennials to be financially secure.
They still have a lot of debts
Finally, Millennials will be needing a lot of financial tips because of their debts. It’s not just the student loans – which is already a major problem for this generation. They also have credit card debts and high-interest rates. These place additional burdens on the finances of Millennials – and it’s already compromised, to begin with. There is a high chance that it will really damage whatever this generation has financially achieved.
Financial tips for struggling Millennials
Now that we know the reasons why Millennials will be struggling harder than ever, what can they do? Here are important financial tips that you can use to survive this economic crisis.
Make arrangements for your debt payments
Start with all your debts. It will be very hard to stretch your limited finances if you have to deal with your debts too. The thing is, it’s possible to solve your debt problems even if you have a tight budget. You just have to act on it immediately. If you think that your finances are in trouble and you will have a hard time paying it off, do your research. Find a debt solution that will allow you to pay your debts despite your limited resources.
You can also call your creditors and lenders. Ask for a reprieve or new payment terms. Given the uncontrollable situation, they will understand your situation. They probably have programs in place that will help people like you who despite their financial struggles still want to pay off their debts.
Create a bare-basic budget
You should also take a look at your current budget. You need to revise it into a bare-basic budget. Rank your expenses based on importance. What are the expenses that you need to survive? These will be on top of your list. This includes food, groceries, utility bills, shelter, etc. Any clothing or entertainment expenses might not have room here. This is a sacrifice that you have to make to ensure that you will last throughout this economic crisis.
It will take some adjustment for you and your family. It will be very hard to do this. But you have to force everyone to follow this. You cannot afford to waste any money right now.
Don’t worry because this will only be temporary. The crisis will not last forever. We just don’t know when it will end. So being frugal is the best way to make your limited resources last. As soon as you get a better paying job or after you have paid off your debt, you can loosen the restriction on your finances.
Avoid using credit
It’s also very important to avoid using credit. This is why you are using a bare-basic budget during this time. You need to avoid credit because it will only make things worse for you. Debt can make your life more stressful because you know that you have limited means to pay it back. So why should you add to it?
You may think that this is impossible – no it’s not. You might be surprised at how ingenious or creative you can be if you are not given a choice. Remember, your grandparents did not have credit cards back then. Or it was not a popular mode of payment. So why can’t you live without your credit cards? Sometimes, it is not enough to just use credit wisely. There are times when you have to completely stop using it. Even if it’s only temporary.
Have a Plan B
The recession has not yet reached its peak. So things right now are not yet bad – but it will get worse. That means you still have time to prepare. You need to think about plan B.
Make a list of the things that can really go wrong. What will you do if you lose your job? You might want to update your resume and keep an eye out for opportunities you can pursue. Are there alternative options that you can pursue so you will still have an income? Maybe there are work-from-home ideas that you have been entertaining. It might be time to pursue these. Even if you don’t lose your job, that’s okay. At least you have opened another source of income.
In case you can’t pay off your debts, what will you do? This is also another thing that you should consider. It’s better to have all the bases covered so you know what to do in case things really go from bad to worse.
Downsize your lifestyle
The last of the financial tips is to downsize your lifestyle dramatically. If your income is compromised, you need to do something about your expenses. The bare-basic budget you did is a good start. What else can you do? Maybe you can move to a smaller home? Or you can move back in with your parents – if they have space for you. This will significantly decrease your overhead. If you have yet to finish your car loan, you might want to get rid of your car. Go back to using public transport.
Consider all your expenses and ask yourself – do you really need to spend on these? Do you need a cable subscription if you have an Internet connection? Is it necessary for you to order take out or can you just learn how to cook? Always go for the option that will make you spend the least amount of money.