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Avoid Bad Credit With These 5 Action Steps

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Everyone starts out their financial lives with a clean slate, but over time you can accumulate bad credit that affects your future finances, loans, and stress.

Now that credit cards are so readily available, people are more likely to acquire bad credit than ever before. Let’s be clear, it’s not the credit cards fault people go into debt and build bad credit, it’s the people’s.

Though if you already find yourself saddled with bad credit, there are services that can help you with this including fixmy.credit.

And if you still have a clean financial record or are committed to rebuild one, here are five of the best ways to avoid bad credit.

5 Ways To Avoid Bad Credit

credit-card-debt

1) Pay your bills on time

This first one couldn’t be more obvious when talking credit score. As you might have already guessed, paying your bills on time every month is the number one thing you can do from preventing any damages to your credit record.

This can be particularly damaging if you miss payments by 30 days or more, so keeping on top of this task should be one of your main priorities.

Remember, even small overdue charges can have a negative impact. Always bear this in mind before making new purchases and receiving a bill.

2) Always start with credit-impacting bills

If you’re in one of those month where it seems everything financially that could go wrong does, you may not have enough money to pay all of your bills. In this situation it always helps to know which bills are the ones which can directly affect your credit score straight away.

That is not to say that you should entirely ignore the other bills, but you can prioritize the crucial bills—credit card, mortgage, loans etc.— to start off with.

Then do whatever you can (save more, spend less, eat peanut butter and jelly for a week) to pay off the bills you couldn’t the month before.

3) Avoid taking on unnecessary debt

As we mentioned at the start, more and more people are taking on debt with these days in order to finance their lifestyles (aka “Keeping up with the Joneses”). But debt doesn’t go away on its own, it needs to be properly managed and paid for.

If you have too much debt which is spread around all over the place, you are much more likely to start missing payments because you don’t have enough money to pay them or you forget about them which will lead you getting into bigger problems.

And your credit score is both influenced by the level of debt that you have overall and also your monthly credit card balance in comparison to your credit limit. Keep that monthly balance as low as you reasonably can which should open up extra savings to put toward debt.

4) Practice managing your money

People manage money in different ways, but you want to make sure you avoid getting in over your head as much as possible.

So, before you decide to take on any new expenses, make sure you stop to think how this could affect you.

You will get the fullest picture of this by creating a monthly budget in which you weigh up your monthly salary versus your expenses. Identify what is essential and nonessential so you know what can be cut if you need to.

5) Save for unexpected emergencies

Though bank balances aren’t factored into your credit score, having some reserves of cash put aside can ensure that you are in a position to deal with any negative financial events which may come your way.

After all, you never know when a financial emergency could put your current lifestyle under threat, so always being properly prepared is certainly the best policy to maintain. And having an emergency account to deploy cash protects you from going deeper into debt if that’s your reality.

Choose Good Credit

Avoiding bad credit is a good financial practice throughout your entire life, so use these five methods as a way to achieve some financial confidence.

Then you can rest easier at night knowing at least your finances are in order, even if the rest of your world is not.

And please remember, every financial decision you make from here on out (and really the day you received your first credit card, but we can’t go back in time) pushes you towards good credit or bad credit.

Paying your bills on time, not taking on significant and unnecessary debt, keeping a budget, and saving for emergencies is how you gift yourself a high credit score. That causes lenders like banks and businesses to want to lend to you and give you a friendlier loan and interest rate because you’re not a high-risk applicant.

Not only are you rewarded with receiving the loan then, if it’s a big purchase like a house or car then the interest rate will often save you thousands of dollars. Winning!

However, making credit card or bill mistakes results in bad credit, lender’s less likely to lend to you, and if they do it’s at a much higher cost. The cards are stacked against you if you continue to build bad credit. And, in most cases, it’s no one’s fault but yours.

So help yourself by moving towards good credit. The future you will be extremely appreciative, and be in a much better off financial place.

This article was written by an outside contributor.

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4 Comments

4 Comments

  1. Coy

    September 1, 2017 at 6:55 am

    What’s going down I am new to this, I stumbled upon this I’ve found it positively helpful and it has helped me out loads. I am hoping to contribute and aid different users like it’s helped me. Good job.

    • Brian Robben

      September 1, 2017 at 11:00 am

      Happy to help, be great.

  2. cost kaina

    September 1, 2017 at 7:03 am

    Thanks for another wonderful post.

    • Brian Robben

      September 1, 2017 at 11:02 am

      I’m fired up that it provided some value for you.

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9 Reasons Young Adults Are Insane Not To Invest In The Stock Market

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Nearly 80% of millennials are not invested in the stock market. That’s scary! And it means a world of financial regret is on the horizon.

That statistic comes from a 2016 Harris poll which surveyed 500 American young adults (ages 18 to 34) and found the main reasons why they don’t own stock is:

  • 40% don’t feel they have enough money to invest
  • 34% don’t feel educated about it to know how
  • 13% said student debt was the reason they haven’t invested

On one hand, some of these people have a point.

For example, it’s impossible to invest when you have close to $0 in your bank account after bills at the end of the month. And it goes against logic to expect someone to invest when they don’t know how to in the first place.

But I see some excuses at the bottom of this.

For the millennials who say they don’t have enough money, I’d ask them, “What have you done to solve this problem?”

They need to pick up another job, work on the weekend, stop wasting money on clothes and eating out, and save their money so they can invest.

Being uneducated about investing can only be an excuse for so long, too. Start educating yourself with a tool called the internet. It’s free!

And student debt is a big money sucker, but again—make more money, save more, and spend less so you can afford to both pay down student debt and invest in the stock market.

What I’m really advising is for these young adults to stop being soft and start hustling for their future so they can invest.

People miss out big time if they don’t own stocks. Here’s why.

9 Reasons To Invest In The Stock Market

reasons-to-own-stocks

Although many of these benefits can come from investing in the stock market in general, I’m specifically referring to investing in low-cost index funds that mimic the S&P 500, for example.

1) History shows you’re going to make life-changing money.

I don’t throw around the phrase “make life-changing money” lightly. It’s 100% true.

Investing in an S&P 500 Index fund, where you buy a tiny ownership of America’s top 500 public companies (give or take), is a great deal for your future.

If you invest in the stock market in your early twenties, there’s often a jackpot at the end of the tunnel. It’s literally like winning the lottery because you’ll end up with millions if you invest your money wisely.

Look at the graph below to see just the growth from 1980 until now. Better news is the graph remains pretty constant on average if you go back 100 years from now—up and to the right.

s&p-500-index-fund-performance-1980

It’s no wonder Warren Buffett said this,

By periodically investing in an index fund, the know-nothing investor can actually out-perform most investment professionals.

If you don’t have faith in putting your money in the hands of the best public companies in America, who are you going to trust with your money?

Where can you find a better option that history backs up?

Exactly, that’s my point.

P.S. I’m not your financial adviser, but look at the graph one more time and make the only sound conclusion! History often repeats itself.

2) No active work is required to profit big.

Like the video above explains, when you set up automatic contributions (through your employer or own brokerage account) then all you have to do is sit back and let your index fund do the work.

How reassuring is that!? Maybe the greatest quality of investing in the stock market is it’s 100% hands off and doesn’t need your time to produce wealth.

It’s get even better when you do a simple comparison of all the time that’s required to build wealth in other areas.

Real estate: Renting out real estate is a pain in the butt if you’re renters aren’t angels (news flash: most people aren’t angels). You can expect property damage, late payments, missed payments, broken rules, and other nightmares that will really second guess your decision to be a landlord.

And even owning property is a headache because of the crazy expensive closing costs, taxes, property fees, HOA fees, and not to mention the monthly maintenance when the sink or shower breaks. It’s never fun to be nickled and dimed to death, which is a usually a regular occurrence in real estate.

Owning a business: If you’re not willing to be obsessed and let your personal desires die for the good of the company, your company isn’t going to generate significant profits compared to the hundreds of thousands and millions of dollars that investing in the market can.

You can work 80 to 100 hour weeks to build your company and hope it brings you wealth. Or invest in companies like Facebook and Amazon where other people are putting in insane work weeks to churn shareholders like you a profit while you relax on the weekend, and take steps toward financial freedom.

Working as an employee:  The problem with working as an employee is you’re going to have to do some serious corporate ladder climbing to get salary raises and generate some kind of wealth. Even then, odds are you’re not getting a 7% to 10% salary increase every year like the stock market provides on average.

The stock market is the most reliable avenue towards wealth.

3) Incredibly higher rate of return than real estate.

You want to put your money where it can grow and produce more money for you, right? Then go with the stock market. And, don’t buy a home!

According to James Altucher, the commonly shared belief that buying a home is an investment is all too wrong. He points out that from 1890 to 2004, housing returned 0.4% per year. Yikes that’s criminal!

The list of reasons for a house’s poor return include all of the above like upfront closing costs, title insurance, moving costs. And then ongoing expenses like home maintenance when something breaks, property taxes, and the inability to easily move for a better paying job.

If you own stocks instead, you can kiss all of those annoyances goodbye. And not to mention, most importantly, come home with an average return on investment of 7% to 10% if you buy a S&P 500 Index fund.

4) Investing into index funds protects your money against inflation.

Inflation is an ugly beast. It robs you of your hard-earned money, well the true worth and purchasing power of that money, over time. And the worst part is it’s unstoppable, in a sense.

For example, if you keep your money as cash then it’s unstoppable and your dollars will always be worth less as the years pile up.

But there’s a solution. Can you guess the hero of the story?

Investing in the stock market, specifically a S&P 500 Index fund, protects your money from inflation eating away at it.

Reason being is the S&P 500 beats inflation the majority of the time and these types of assets are immune to inflation.

Plus, many companies can pass on the costs to their customers. So if you own shares of these companies, then you’ll get the profits as an investor (even if you take a small hit as a consumer).

This is just another example of why it pays to be an investor and not a consumer.

5) Buying stock is a liquid investment you can sell at any moment.

Run into a tight squeeze where you need immediate money?

Or do you ignore the sound advice to build an emergency savings fund and it bites you in the butt as your car breaks down or you lose your job?

While it’s never a good idea to sell an asset early and get in your own way of bringing in more profits, the fact that stocks are liquid investments can be a life-saver for some.

At any moment of any day, I can sell shares of my individual stocks or index fund and get cash in my checking account as soon as the transfer completes—usually two to three days.

The opposite is true with real estate and other types of investments.

Once that money is taken out of your bank account for a down payment or mortgage payment, then you have no chance of getting that money back on your real estate investment property in the immediate future.

Instead of selling your investment immediately and receiving the money in two to three days with stocks, you may have to wait two to three years to sell your asset if it’s real estate.

Liquid assets like stocks are even more valuable given the quality that you can sell them at any time.

6) Easy to diversity where your money is invested.

Assuming your name isn’t Richie Rich, the odds of you owning 25 different startup companies or 17 penthouse properties across the globe are slim to none.

Though you can own a sliver of 500 different companies or even thousands if you buy index funds listed in the stock market. For example, you can buy a car, technology, food, retail, shoe, farm product, defense, and more companies than you can possibly remember to stay diverse.

Reason I bring that up is diversity is key for the average investor who is scared of losing all of their money or loses sleep when their investments are volatile.

A well-diversified investment portfolio protects against volatility and too much risk, which is hard to come by in other asset types.

7) Get taxed lower for long-term capital gains.

Investing in the stock market doesn’t mean the taxes on your returns completely go away. (Wouldn’t that be a blessing?)

But the taxes you pay on long-term capital gains (stocks you own for longer than 12 months) are significantly decreased compared to getting taxed on regular income.

Add this to the list of reasons it’s in your best interest to invest. If the government incentivizes investing with these tax policies and you still don’t do it, something is wrong with you.

Just don’t buy and sell your stock earlier than a year of holding it or else you’ll be taxed higher since it’d be a short-term capital gains tax (any stock sold before you’ve had it for at least 12 months).

Oh, that’s not it. If your investments lose money, you can also lower your tax bill using those losses. The goal of investing is not to lose money, but if it happens then reducing your tax bill is a decent compromise.

A wealth growing vehicle that also reduces my taxes is a slam dunk investment. This opportunity is yours for the taking as well.

8) It’s the only way to own a percentage of the products and services you regularly buy.

Eat at McDonald’s every day (like my dad does)? You can own a piece of them buy buying MCD.

Are you a big texter and talker on the phone? You can buy shares in Verizon (VZ).

Always enjoy a nice Disney movie to take you back to your childhood? Buy shares in ticker symbol DIS.

The ability to purchases ownership of a company you use all the time is another thing investing in stocks has going for it.

Now would I put all of my money in only products or services I buy? No, but it is a nice mental exercise to purchase ownership of a company that you use all of the time.

Because, in a way, you’re kind of buying from yourself and profiting from yourself. That’s legit!

9) It’s easy to get your feet wet with a small amount of money.

Want to be an angel investor to invest in a hot new startup company? Can’t happen unless you have an annual income of over $200,000 and a net worth of $1 million. Poor people not invited.

Want to invest in Grant Cardone’s real estate fund? Sorry, tough luck. You also need to be an accredited investor.

Want to buy your own multi-family real estate property and rent it out? Good luck collecting that $100,000 down payment to secure the property on top of the mortgage payments every month.

The system blocks out the little investors who can’t make any moves to grow their wealth.

However, it’s easy to start small when buying stocks.

You don’t need to be an accredited investor to invest in companies like Facebook, Amazon, Netflix, and other giant companies like GE.

So if you only have $600 to invest, perfect. Buy $600 worth of shares into a Vanguard index fund and slowly increase your position over time by buying more shares going forward.

Heck there are even new apps out there that will automatically help you invest spare change from purchases like Acorns.

Where buying other assets like real estate and startup investing limit everyone but the rich from participating, anyone can get started investing with as little as a $100 give or take.

And for any parents out there, it’s wise to put your kid’s birthday money into an index fund to get them off on the right start. A little money invested now can likely snowball into millions.

You Reap What You Sow

Two different financial realities await you.

The good news is you’re in control of your financial future. You get to decide the plot line.

If you desire to retire early, have millions in the bank to spend during your golden years, and live a comfortable retirement with your family, all you need to do is start investing.

The bad news is you’re also in control. Meaning you can make the wrong money decisions, not invest in the stock market, and be left with the staggering consequences.

Retirement isn’t fun if you have no money to afford to do anything entertaining. Then post-work life becomes the biggest drag of your life. Some people stop living to such a degree that they wish for death.

So from one young adult to another, make the right choice.

Have a long-term view about life. Buy some shares in a S&P 500 Index fund. And get the financial markets working for your money, not against your money.

Then you’ll give yourself a great opportunity for a happy ending: reaching financial freedom.

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Do This To Ensure You Become A Stock Market Millionaire

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Wouldn’t it be cool to be not just a millionaire, but be a stock market millionaire? That’s way sweeter than inheriting millions or winning the lottery.

Because the status of stock market millionaire has 3 main advantages below the surface.

For one, you get the pride that both your hard work learning how to invest and your patience paid off extremely well. Inheriting money comes nowhere close to the high feeling of earning your own money.

Making your own lot builds confidence in yourself in all aspects of life going forward.

Second, how life changing would it be to have a million dollars to your name? Imagine the increase in living conditions for the loved ones around you and yourself if you pulled this off.

Just paying off your cars, education, and house in full would be unreal, and your overall financial stress would almost vanish.

So there’s no question investing in the stock market can change your life.

And third, becoming a stock market millionaire doesn’t mean you’re maxed out on making money because you have to save some for the other fish in the sea. It’s the opposite!

The amount of money you can make is unlimited, which leads to my point. You can take what you’ve learned to earn your first $1,000,000, and use that financial knowledge to go make yourself $2, then $5, and then $10 million in the future.

See what I mean? That’s why no one disputes the saying “the rich get richer” because it’s spot on.

Liking what you’re reading? Nothing is stopping you from achieving this reality.

Here’s the simple roadmap to become a stock market millionaire.

Where To Invest Your Money

If you’re familiar with my money talks, you already know I’m a big fan of investing in the S&P 500 Index.

For new audiences: In my book Freedom Mindset, I recommend every beginning investor puts their money into a S&P 500 Index fund. And I’m making that same recommendation to you.

Just take a look at this chart to see why.

S&P-500-30-year-return

You can bet on anything close to a 10% annual return if you put your money here.

I’ve covered this all over the place in my book, articles, and YouTube videos so I won’t go too far in-depth. Check out my other resources if you’re interested in learning more about index funds.

Related: In Index Funds I Trust

The Key: Automatic Investing Contributions

become-a-stock-market-millonaire

Those S&P 500 Index performance numbers are great in all but you only get the lion’s share of them if you’re consistently contributing to your fund.

Problem is most people are inconsistent in general, and even worse when it comes to being discipline with their money. This is why 76 million Americans are financially struggling or barely getting by.

Missing months of contributing money to your portfolio every year will cut off anywhere from $100,000 to $10,000,000 in potential lifetime earnings or more. No discipline will cost you if you commit this unforced error.

To protect yourself from this error and guarantee you always hit your monthly investment contribution, do this one thing: Set up automatic monthly contributions to your investment account.

By automatic monthly contribution, I just mean setting up a recurring transfer from your checking account to your investment account to buy more shares in your index fund every month.

If you can set this up (and continue to make enough money where there’s enough money in the checking account for the transfer to go through), you can ensure you eventually become a stock market millionaire.

That’s basically it to be honest. Not too complicated right?

The best part in my opinion is that this is 100% hands off labor once you set it up once. Setting up this monthly transfer could take as little as 5 minutes.

Just don’t stop these monthly contributions and the gravy train will keep cruising along to increase your net worth. You have to love this!

Gameplan Going Forward

Once you’ve set up your automatic monthly recurring investments (say that five times fast), all there’s left to do is sit back and relax baby.

Well not really, but it sounded good.

Your objective at this point is to make more money (and save more) so you can feed the beast more ammunition so it brings you back more money.

Your goal isn’t to make money so you can save it, but so you can invest it to earn a higher income. That’s what the 1% has learned and the middle-class struggles with executing.

But once you’re closer to retirement, or if you decide to retire early with your stock market winnings, then the gameplan will change. Eventually the beast will feed you money to live on instead of you feeding it.

Until you’re at that comfortable spot though, feed the beast with automatic monthly contributions and he won’t let your finances down.

Cheers to mastering our money!

Related: Top 5 Worst Purchases For Your Financial Future

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Millennials Are Overconfident With Money: Is It True?

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millennials-money

Millennials (born between 1980-2000) are always a topic of discussion, especially when it comes to money management. Some people claim they are overconfident with money, while some claim they lack necessary financial knowledge.

What are they exactly doing with their money?

Well, this kind of topic automatically needs a comparison between the two generations so we can learn more.

In this article, we will compare millennials with baby boomers because both the generations have faced the economic downturn. It is better to come up with another financial topic on Gen X financial behavior.

Well, when it comes to baby boomer’s knowledge on money management, some people are inclined to give them a 10 out of 10. Most of the people think, our previous generation possesses more financial knowledge than the millennials. It’s said that millennials are delusional about money.

Even the previous older generation often claims that millennials are clueless on every subject, especially about money.

Though millennials are managing their student loans, meeting their targets at work, home loans, they lack the ability when it comes to financial know-how.

But millennials consider themselves as financially savvy.

We should find out what stats are saying about it?

Unfortunately, many survey reports reveal that millennials fall short on financial knowledge.

A research was conducted by the Financial Industry Regulatory Authority’s Investor Education Foundation. During the research, a number of financial literacy questions had been asked to more than 5,500 young people (aged 23 to 35).

Based on that research, a recent survey was held by the National Endowment for Financial Education and George Washington University. The report revealed that only 8% of the surveyed people have profound financial knowledge, while a quarter or 24% have only a basic understanding of money management.

The shocking fact is 69% of them claimed that they are quite savvy on financial know-how.

Ted Beck, the endowment’s president and CEO, said that “This generation is diverse and highly educated. However, their overconfidence puts them in an extremely fragile financial position, and sadly, they don’t realize it.”

Confidence is a good thing; it develops self-esteem, but overconfidence can be dangerous when it comes to managing finances.

Kay Pfleghardt, a registered financial associate with Family Wealth & Legacy LLC., is a millennial and claims that millennials often underestimate the value of financial peace.

If millennials give importance to their student loan obligations, they can easily build a golden nest egg for their future. If they prioritize on an emergency fund, they will never fall into further debt obligations and they will gain a sense of accomplishment.

She quoted that, “This is especially true for millennials, as the vast majority of other millennials around them have failed to do this one simple thing.”

Besides all negative impressions about millennials’ money behavior, some research revealed their credibility on money management.

According to a 2016 Bank of America/USA Today report, it is true that millennials are less likely to pay their rent and health insurance premiums. They even contribute a very insignificant money to their retirement fund.

But it is also true that they are more burdened with student loan debt than the previous generation. Unfortunately, millennials appeared on a shaky economic situation compared to the previous generation.

As per the Young Invincibles report on Federal Reserve data, millennials earn 20% less money than the baby boomers did at the same age.

Pew Research Center’s senior editor Bruce Drake has said, “Millennials are the first in the modern era to have higher levels of student loan debt, poverty and unemployment and lower levels of wealth and personal income than their two immediate predecessor generations had at the same age.”

The Great Recession impacted all millennials’ financial behavior. It has changed how they save, spend, and deal with banking issues.

The good sign is they learned some valuable financial lessons in a hard way.

According to the 2015 Goldman Sachs report, millennials are good in making important financial decisions. They often postponed marriage until they settled with good savings, a home, and a car. They also dislike spending money on luxury goods.

One of the most important things is they have profound knowledge on technology, which helps them gain financial savvy.

According to a CreditCards.com survey, “The Great Recession also made millennials more averse both to credit cards and credit card debt.” Nearly 36% of them have no credit card debt.

Well, a lot of statistics are there. But we need to find out who deals with finances better – a millennial or a baby boomer.

Millennials vs baby boomers: Who manages money better?

Millennials are now the largest living generation in America, but when it comes to saving money, baby boomers are the winners.

There are 75 million baby boomers (aged 52-70) who control nearly about 70% of all disposable income in our nation. They will inherit about $15 trillion dollars over the next 20 years. As per the financial analysts, baby boomers will continue inheriting it over the next several years.

1. Money management

Baby boomers are really remarkable money managers. They are more careful about saving money and building a good retirement fund for their future.

The baby boomers took advantage of employer retirement fund, pension fund, and other retirement savings fund to grow their hard-earned money.

They saw a big growth in investment during the 70s, 80s, and 90s when interest rates were in double figures. However, sadly, they faced less profit later due to the downturn in the investment market. But today interest rates are below 1%. They didn’t ignore their monthly financial obligations (rent, utility bills, credit card bills, etc.).

On the other hand, millennials are more concerned about their living cost, mortgage, and student loan debt. Since the millennials’ earning is not decent, they are unable to establish their retirement fund.

But when it comes to living within means, millennials beat the baby boomers. The extreme economic turmoil teaches them how to survive with lower wages and job insecurities.

Many millennials have huge student loan debt, which engulfs the major portion of their monthly income. They have the less available capital for savings and investments. But, they survive by doing hard work at their job. Most of the millennials have more than one or multiple income sources to manage their lifestyle.

2. Investment

It is said that in investment, millennials are more risk tolerant than baby boomers. The older generation often took the help of financial advisors before investing their money. This is because when they were growing up, they weren’t able to get financial information easily.

Now, millennials can get important information from the internet so millennials are more hesitant to seek financial advice. They often make their own investment decision. Thus, they often encountered loss in investment.

It is also true that due to the rising educational cost and lower wage, either they are investing insufficiently, or starting the investment journey late.

What financial experts think about millennials’ financial behavior

Millennials are the generation who are haunted with the huge student loan debt burden. It has a great impact on their financial behavior.

Due to their outstanding loans, many millennials delay in achieving some major milestones in their life (buying a home or a car, getting married, and having children). And 48% of millennials admit that they have no emergency fund and they are unable to come up with $2,000 to combat an emergency.

Less than one-third or 32% said that they have only 3 months of household expenses saved. While 30% of millennials had overdrawn their bank account; either took out a loan with their retirement account or made a hardship withdrawal.

But financial experts warn that if they don’t change their financial behavior, the consequences of their actions will affect their financial future.

Here are some financial experts’ suggestions for millennials to improve their financial health.

1. Kay Pfleghardt, a registered financial associate with Family Wealth & Legacy LLC. suggests:

Setting up an automatic transfer to a savings account is important.

According to her, building an emergency savings cushion is important to avoid incurring credit cards debts.

She says, by depositing the money directly into the checking account, millennials can build their emergency saving fund easily. They just need to set an automatic transfer in their bank account.

Thus, the money gets deposited on the day they receive their paycheck. She advises to simply automate your savings. It is the simplest way to build a habit of saving money by keeping the disposable income out of sight and out of mind.

2. Robert Johnson, president, and CEO of The American College of Financial Services suggests:

Investing for retirement is crucial instead of saving for retirement.

According to him, accumulating wealth over a longer period is one of the greatest assets one can achieve in life.

The UBS study (The Union Bank of Switzerland) showed that millennials had an asset allocation (large percentages in cash and little in equities) that was similar to the baby boomers.

He said millennials are reluctant to embrace investment risk, but they have the ability to bear the risk. So they need to invest in the long-term equities instead of buying bonds and stacking cash. Thus, they can get higher return than ever.

He quoted “If Millennials remain unwilling to embrace risky assets, they will find that they will have to set aside a much higher portion of their income for retirement or to work much longer than they planned to.”

3. Flynn Zaiger, a Millennial founder of a digital marketing agency located in New Orleans suggests:

Improving money knowledge is imperative.

Due to poor financial knowledge, most of the millennials fail to achieve their financial goal. He suggests them to save money proactively. Thus, they can achieve their financial goals with time.

He quoted, “Connecting their current situation with their future is the best way to increase the desire for greater money-management knowledge in Millennials.”

Most of the financial experts agree that in some ways, millennials are smarter than baby boomers. Here’s why:

3 big ways millennials are ahead of the baby boomers

1. Millennials are quick to learn new payment technologies

Almost 51% of millennials are taking advantage of new mobile-based payment technologies over cash, debit and credit cards. In comparison, only 17% of baby boomers are able to understand this new payment method. Some of the smartphone accessible payment methods (Mobile check acceptance, digital wallets, and mobile bill pay) are very popular among this generation.

2. Millennials know credit card debt is a “no-no”

According to a survey by Princeton Survey Research Associates International, almost 63% of people aged 18-29 don’t keep a single credit card.

They prefer to use cash, mobile pay, or prepaid cards for purchasing things. Thus, they can track their spending easily. Also, using prepaid cards instead of credit cards help them to avoid incurring credit card debts.

According to David Smith, head of marketing for Kaiku Finance, a provider of prepaid products, “Already immersed in student loans, millennials are not interested in running up credit cards and accruing more debt. They like the convenience, the transparency regarding fees, and the predictability that prepaid cards have to offer.”

3. Millennials prefer to buy home that they can afford

Millennials are calculative; they know the huge mortgage obligation can overwhelm them. They take their time and prefer to buy a home by staying within their means. They don’t believe in “the bigger, the better” concept. They believe that staying in a small cozy home is better than counting a big amount of mortgage payment every month.

Pamela Hanson, founding partner of Downcity Home Closing in Barrington, R.I, said “A trend we’ve noticed as a residential home closing firm is that more often than not, millennials buy under their means. Not so with the generations that preceded them where bigger was better, and the plan was to finance as much of their home purchase as possible.”

Conclusion

At the end of this detailed discussion, we can conclude that the millennials are not at all dumb when it comes to handling their finances.

They prefer to follow their own terms. They are more willing to adopt the latest trend and apply it even when it comes to finances. And they don’t want to follow their previous generation’s financial methodology.

They have taken a lesson from the investment market when baby boomers experienced a bad phase in the investment market. They have also learned some crucial financial lessons from the Great Recession, but they still need to learn more things in the financial field.

They have to work hard to prove their credibility on building a good retirement fund to protect their financial future, saving money for an emergency fund and savings account, making monthly payment obligations (utility, insurance premiums, debts), investing, and financing their child’s education, etc.

It is a good sign that millennials are no longer budget haters. And with the help of the online budgeting apps, the task of crafting a monthly budget is becoming easier.

TD Ameritrade’s study has revealed that “Millennials are 10 times more likely to use budgeting apps than our previous generation. 80% of millennials have a budget in place as opposed to a mere 61% of baby boomers.”

Lastly, both the baby boomers and the millennials have experienced a difficult economic situation. While the millennials faced extreme financial constraint, baby boomers have seen an extreme investment downturn due to poor investment market performance.

Both of them got affected by the poor economic phase. Millennials lost their jobs or forcefully had to join a low-salaried job. They delayed their marriage or home purchase. They are still facing sky-high education cost.

On the other hand, baby boomers were unable to build good retirement savings due to the poor performance of the investment market. Many of them have faced an uncertain retirement or worked until their death, to survive.

To sum it up, instead of being overconfident, if the millennials concentrate on basic financial principles laid out in this article than they can succeed financially.

Author’s Bio: Amy Nickson is a web enthusiast. She completed her graduation from Oglethorpe University, Atlanta, Georgia. She works as a financial writer and she shares her expertise through her crisp and well researched articles based on money management, money saving ideas, debt, and so on. You can follow her on Oak View Law Group where she shares her expertise on the personal finance field.

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