3 tips for millennials to take control of their financial situations
These days, millennials are becoming an economically significant cohort of people with strong educations but little yet to show for it in terms of jobs and money. So how do young adults prepare themselves for the financial rigors of adulthood?
There are a number of ways to get ready for what's to come financially, from traditional ones such as learning how to effectively use a credit card to emerging lessons like how a phone bill can build your credit score. This will prove especially useful for millennials, because chances are if you are one then you're fairly smart, but lacking a significant income, according to government data. In 2000, the median annual income for young adults was $38,000, while these days it has dropped to around $33,900. Additionally, just over two-thirds of young adults are employed these days. This isn't a good sign for millennial credit scores, and remaining financially smart will be vital to avoid potential banking and loan problems in the future. For some help on staying financially smart in a decade that has been tough on millennials, read some of the tips below:
1. Review your student loan debt
One thing holding many young adults back is the burden of student loans. Its easy to graduate with what can seem like way to many loans these days, and getting your student loan reviewed done can help with that. Reviewing your loans will allow you to determine whether or not you'd like to consolidate them, which could ultimately make paying them off easier. This will make keeping track of your payments - which have been completed and which you've missed - much easier, and keep you out of trouble due to missed bills. This isn't the best solution for everyone however, and you should do more research into your loan situation before considering the options presented to you after a student loan check-up.
2. Build yourself an emergency fund
Building an emergency fund can help you avoid financial trouble should you come across an unexpected situation, Bankrate explained. You can't plan for everything, and that's where your emergency fund will come in handy. Start collecting for the fund by setting up a goal for how much you'd like to have in it. Also important when collecting money for an emergency is deciding where you want to store it. Placing it in your Candy Land box might not be a good idea, but if you're storing the fund in a bank you should understand the account thoroughly. And one of the most important things about your emergency fund - save it for emergencies only.
3. Try out alternative credit scores
Before you make many major purchases, people such as lenders will want to go over your credit score in order to make sure that you're financially responsible. When they see that you have a good credit score, it makes it easier for lenders to make the safe assumption that you're a financially responsible person. However, not all credit scoring models take into account every payment you make. In fact, sometimes your credit score is based more on negative information than positive. That's why it could be useful to check out alternative credit scores, such as PRBC, which take into account things such as utilities, cell phone bills, subscriptions and rent. The more accounts you have with your PRBC, and the better you keep up, than the higher your score.
For millennials facing some big financial decisions, use the three tips above to make sure you're making the right choices for your future.