Thursday, September 15, 2016

How Cash-Strapped Millennials Can Survive An Unfair Economy

unfair economy
It used to be the case that each generation was unequivocally better off than the generation before. War babies did better than the interwar generation. And baby boomers did better than them. So the pattern continued, and things were looking good. Except things began to change by around the time we got to the 1970s. No longer were average wages rising at the rate at which they once were. And in many communities wages were totally flat. Thanks to state handouts and other benefits, things continued to get better for the median family for a while. But then the financial crisis hit and changed everything.

One of the big impacts that it had was the effect on millennials. When the unemployment rate rocketed, the first people to suffer were the new entrants into the job market. Companies didn’t want to train new talent when they themselves were on the line. They just wanted to get the people in who could do the job without question, and that meant older workers. As a result, millennials as a group spent a long time out of the labor force. In turn, that meant that they built up less experience. Today, the result is lower wages and a declining standard of living.

Millennials themselves are certainly feeling the pinch. According to the Millennial Money Mindset Report, 41 percent said that savings were a goal. And most said that they wanted to achieve savings within three to five years. The other problem that millennials have had is their enormous overhang of student debt. According to the same report, that now stands at over $47,000.

Such economic headwinds mean that it is difficult for millennials to make financial headway. So what can millennials do to improve their finances and achieve their goals?

Be More Zen With Your Finances

Nicole Lapin is the author of a personal financial guide for women. Her advice to women in the book is pretty explicit. She says that millennial women should stop going out every Friday night with the girls and spending a fortune on drinks in bars. Instead, they should think of different ways to save money on entertainment. Lapin points out that one of the biggest issues when it comes to spending money is peer pressure. That's why she suggests that women all agree together to reduce the amount of money that they’re spending. Her advice is to get together a group of friends and decide to party in a way that costs a lot less. Instead of going out and spending $4 a drink, get a cheap bottle of wine for $8 and a few snacks. Then just go round to somebody’s flat or house. Often these nights can be just as good as the real thing, she says.

She also suggests that millennials get creative about getting hold of new clothes. Don’t just go down to the store and grabbing a load of clothes off the shelves, she says. Instead, swap clothes with your friends. Their trash might just be your treasure.

Have A Plan B

Robert Kiyosaki is the world famous author of Rich Dad, Poor Dad. His books have sold millions, and for good reason. He’s usually right.

His advice for millennials is pretty specific: have a plan B. One of the reasons for this is, apparently, psychological. It can be hard for millennials to really concentrate on what they’re doing when they’ve got so many financial concerns. Kiyosaki says that the best solution is to have a plan B, so that if your plans don’t work out, you’ve got another option. But what does that mean in practice? First off, it means having cash reserves or obtaining cash loans to cover immediate expenses. And then it means having ways to get back on your feet in the future. That could, for instance, be a side business - like a family business. Or it could be a place to stay if you lose your job, or your business plans fall through.

Avoid The Dead End Job

One of the worst things that any millennial can do is get stuck in a job that isn’t taking them where they want to go. Sure, you might be working 40 hours a week. But if there’s no scope for improving your lot, you might as well just forget it.

Clark Howard hosts the Clark Howard Show. His advice is to shop for a job, just like you’d go shopping at the local market. In his view, workers shouldn’t put up with employers who offer them cheap raises. There are plenty of companies out there right now who are looking for talent. And if that’s you, then you should be paid accordingly.

Of course, Howard’s views come with a twinge of showbiz idealism. But the advice is still sound. There usually is something better out there on the market. It’s just whether you can be bothered to look for it.

Right now, the biggest problem for Millennials is that they’re simply not making enough money to make ends meet. The report we discussed earlier shows that 57 percent of people aged between 18 and 35 don’t have the money to do basic things, like pay the rent. Finding better-paid work is, therefore, a top priority.

Don’t Take The Back Seat With Your Money

That millennials don’t have any money isn’t just down to the unfair economy. According to Dave Ramsey, who hosts his own show, millennials have to take responsibility too. That means that they need to think carefully about how and where they're spending their money.

He says that the people who are proactive with their money are usually the people who meet their goals. Don’t just view a lack of money as something that just happens to you. He says that millennials need to tell their money what to do. Most millennials know that they don’t take a very active role in knowing where their money gets spent. The advice is to save, budget and get rid of debt. And that can only be done if you force your money to work for you.

Changing Your Perspective

Expert Jeanette Pavini runs a coupon website. She says that millennials should change their perspectives. Instead of complaining about a lack of money, they should give themselves a raise by spending less. That, of course, isn’t really how economics works. We only earn money in order to spend it eventually. So spending less is actually a way of giving yourself a pay cut. But Pavini might have a point on the attitude front. Yes, it seems terribly unfair that millennials have less than the generations before them. But, without some radical overhaul of the financial system, that's not going to happen anytime soon. Perhaps we need to adjust our expectations in the short term to achieve our goals in the long term.

Getting rid of unnecessary expenses, on the other hand, is very much like giving yourself a pay rise. Be honest, do you really make use of your $100 a month gym membership? If you don’t, don’t bother with it and net yourself an extra $1,200 a year.

Invest In Yourself

One of the sad things about most millennials today is that they are in jobs that don’t make them more valuable. They’re making burgers or cleaning offices. They’re not getting into the positions with high value-added.

Because of the state of the job markets, experts like Kyle Taylor wonder whether going the traditional route is even worth it anymore. They suggest that savvy millennials set up their own secondary incomes by setting up a business. Most graduates have something they can sell, even if it is just their knowledge of their subject. Tutoring companies are all the rage right now, given the increased demand for education services.

There’s also the fact that skills are the main way in which people earn money. Upping your skills in pretty much any business area can lead to significant jumps in pay. Right now there are a number of hot skills employers are after, so make sure you check them out.

Use Tech To Get Money-Smart

If cutting your spend isn’t exactly your style, there are still options available to you. One option is to use tech to find the best deals online. There are a ton of websites that amalgamate deals and coupons. And using these sites is a surefire way to find the best deal.

And it’s not just the esoteric stuff that has discounts. It’s regular, run-of-the-mill stuff from stores like Whole Foods and Target. Many retailers also offer gift cards which have savings of between 1 and 25 percent. The pros stack these cards with coupons and other offers to double up on their money-saving deals.

Doing this takes a bit of time and effort. But it’s a good way to cut down on expense without wrecking your standard of living.

Summing up, it should be noted that it’s not just about the money. It’s also about the environment in which you live. Sure, having a great bank balance is great. But if you’re ruining your health to get it, it’s just not worth it.

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