Attention Millennials: Do You Also Have These Money Worries?
Dec 07, 2021
Research indicates that millennials and female entrepreneurs are among the most affected workforce segments following the pandemic. For many in the former category, it's a case of history repeating itself. Those who graduated into the Great Recession a little over a decade ago suffered a fair bit. And they now have to go through it all over again.
In the Eye of the Storm
In April 2020, a poll conducted by NBC News and The Wall Street Journal indicated that registered voters aged 18 to 34 were the most likely to have salaries deducted or lose health insurance due to COVID-19. Moreover, according to academic Peter Jones (Associate Professor at the University of Alabama at Birmingham College of Arts and Sciences), millennials' jobs are under a more significant threat than older generations.
There might also be an eviction crisis on the horizon since younger Americans have a greater tendency to rent homes. Also, a survey from data analytics firm First Insight reveals that the pandemic has affected millennials' buying decisions more than any other age group. Many have cut down on multiple shopping trips every month, while weekly nights out have also taken a backseat.
Tips to Stay Afloat
Looking on the bright side, the young ones are indeed learning the value of "budgeting" due to the ongoing financial crunch. Of course, handling money prudently is vital in the current climate, whether or not you're a millennial dealing with the economic fallout of COVID-19.
In any case, the following tips will help you manage your finances better.
1. Take Stock of Your Spending Behavior
As stated earlier, the purchase decisions of young people have already been influenced significantly by the coronavirus. To that end, consider the areas where you can make the most savings. Housing is one.
Data from the Census Bureau indicates that more than 2.5 million adults moved in with a parent or grandparent in the first few weeks of the pandemic. If rent is becoming unaffordable, consider negotiating it or starting a repayment plan. You might even want to break your lease early.
In case you've been renting through a management company, find out if they report to credit agencies. That way, you'll know if a big decision would have an impact on your credit score. If slashing your rent or mortgage is not possible, consider preparing a revised budget. This should only include payments for essentials like grocery, utility bills, housing, etc.
For those lucky enough to still be working, personal finance experts recommend the 50/30/20 budgeting formula. According to this, half of your monthly after-tax income should go towards paying for needs/essentials (rent, mortgage, groceries, utilities, etc.), 30% for wants (entertainment, restaurant trips, takeout, etc.), and 20% for debt repayment or savings.
2. Apply for Unemployment Allowance
Have you lost a significant source of income since the onset of the coronavirus? Were you laid off or furloughed? Did your workplace shut down, and you suddenly found yourself without a job?
The first thing to do in such circumstances is to check if you're eligible for unemployment benefits. If you are, then don't waste any time applying. There are many more applicants these days, and your candidature may take a while to be processed. So, do this at your earliest!
3. Try to Create Multiple Income Streams
I'd been advising my clients to create multiple income streams long before this pandemic ravaged our lives. Doing so now is even more critical. By relying on just a single source of earning, you're basically leaving yourself vulnerable to the recession.
It's still unclear as to how severe the economic cost of COVID-19 is likely to be. The industry you work in might be rendered obsolete next week. So, it might be a good idea to add to your skillset and upgrade your knowledge.
Other than that, think about which existing competencies in your armory can be leveraged to build an additional source of income. Perhaps you're good at expressing yourself through words and could start freelance writing. Or maybe you've always had an eye for aesthetics and could begin a side hustle as a visual artist. Monetizing a skill or expertise in this way can help create a significant new revenue source.
4. Renegotiate With Your Lenders
If you're behind on mortgage payments, struggling with credit card debt, or having a hard time paying off that student loan, contact your lender and discuss different options. Various lending organizations have specific programs in place to help debtors under challenging situations.
Besides, such arrangements are more readily available in the ongoing scenario. Like the consumers, lenders are well-aware of the difficulties the economy is currently facing. So, talk to your lender and discuss the possibility of a lower interest rate or deferred payments.
Interest rates are relatively low right now. Which means it might be a good time to refinance your student loan or mortgage. Whatever the situation is, just don't allow your debt to accumulate.
5. Set Some Money Aside In An Emergency Fund
I am aware that not everyone will be able to manage this. However, if you still have a job but are not maintaining an emergency fund, get started right away. No one is sure how long this crisis will last. Therefore, planning is crucial.
Ideally, it would help if you had a stash that will cover your expenses for at least three months. If that's not feasible, save whatever you can every month. Making an early withdrawal from your retirement account (should you have one) is also an option.
Even though dipping into savings is not usually advisable, the current situation is very uncertain. We all keep money aside for a rainy day; this will be that "rainy day" for a lot of us.
Ray of Hope
One thing that millennials, especially older ones, have going for them is their experience of working through the Great Recession. Although the current predicament is unprecedented, having already lived through similar economic difficulties does give them an advantage.
They'll be aware that crises aren't permanent. Markets eventually recover, and it's possible to come out the other side unscathed (or after having sustained minimum/bearable damage). So, be prudent with your finances, plan meticulously, and you'll be okay!
Stay connected with news and updates!
Join our mailing list to receive the latest news and updates from our team.
Don't worry, your information will not be shared.
We hate SPAM. We will never sell your information, for any reason.
