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Financial, Legal, Insurance & Management ServicesMillennials and Their Financial Choices
A look at Millennials and the financial choices that they make, including retirement, loans and home ownership.
Every generation has its own ways of looking at money, but Millennials seem to be dealing with a lot of different issues that their parents' generation didn't have to deal with at their age. Because of this, they are approaching everything from credit cards to retirement with a much different attitude. These are some of the key ways that this generation is different.
1. Student loans. A lot of fuss has been made in the media about the record amount of debt that Millennial students are taking on to get a degree, but according to USAToday.com, no one is quite sure how it will affect them long-term. For now, however, a lot of economists are noticing that Millennials seem a lot more focused on getting a job that pays well rather than following their passion.
2. Home ownership. This is one of the biggest differences between Millennials and previous generations. According to multiple studies, Millennials are not placing the priority on home ownership that other generations have. The reasons for this might be that this generation is burdened with a lot of debt, but other economists believe that this generation was scarred by the experiences of their older siblings and parents during the recent housing market bust. No matter what the reasons, however, a lot of economists believe that the next few decades will have much lower rates of home ownership than previous years.
3. Payday loans. While these loans have gotten a bad rap in recent years, but according to Foxbusiness.com, many Millennials are turning to them because traditional credit sources, such as credit cards and home equity loans, are not options for them. As banks tighten their lending standards, it is becoming a lot harder for anyone without a full-time job to get a credit card. According to TopTenReviews.com, payday loans do come with high fees, however, making them an expensive form of credit. If a Millennial has an emergency and needs to take out one of these loans, it's a good idea for them to pay it back as quickly as possible.
4. Retirement. Millennials will pretty much never get access to a defined benefit pension plan, so they're responsible to save for their own retirement. Surprisingly, this generation is showing high levels of involvement with their employer-sponsored retirement plans. Of course, this is only true for Millennials who have been able to find full-time employment. Other economists believe that this generation will be much more comfortable with having two or more careers, and as such they might never really stop working and fully retire.
Millennials are definitely going to be a generation that changes the way that the world thinks about money and investments. Predicting what they'll do over the next several decades, however, can be difficult.