What are some good financial goals for millennials?
A recent survey created by Credello had millennials share their financial resolutions for 2023. Questions range from in-depth inquiries about financial expectations for the year ahead to more colorful “would you rather?” polls. Here are a few of our favorite survey findings.
The results help give an idea of where millennials are in terms of money and may help you see where you can improve your own finances. Overall, the majority of millennials surveyed said that their biggest financial goals are to save more money and to pay off debt. The majority, 73%, are optimistic about the future and say that they expect to fare better financially this year.
Here are 5 of our favorite survey questions and findings, along with five financial goals for millennials in 2023.
Would You Rather… Stop Going to Bars for 3 Months or Be an Extra $500 in Debt?
If the pandemic has shown us anything, it’s that we can probably survive without going out to bars every weekend. Sure, three months sounds like a lot, but many have avoided bars and restaurants for almost a year at this point.
So, it doesn’t surprise us that the vast majority of survey respondents (80%) said they would rather stop going to bars for three months than be in more debt. However, this was truer for women (87%) than men (72%) and single people (87%) over married/with partner people (78%).
It looks like the women and the singles care more about their bank accounts than an extra glass of Merlot. Either that or they’d prefer to drink that extra glass of Merlot at home on their couches.
Would You Rather… Have Your Love Life or Your Finances Made Public?
Do you have anything to hide? If you don’t, you’d probably be more likely to reveal your love life over your financial situation. If you’ve got secrets, you might want to keep some details locked up. Talking about finances can be taboo, sure, but dating can be just as juicy of a topic.
Of the millennials polled, 58% chose to have their love lives be public over their finances. For women, 65% said they were fine with their romantic lives being made public over their bank statements, but only 51% of men agreed. We can only assume that men have far more to conceal about their dating histories.
While there are reasons for keeping some of your financial details private, these results are likely reflections of the social taboo of talking about money and the financial state of many millennials.
Would You Rather… Put an Extra $10,000 in Savings or the Stock Market?
It’s important to note that this survey was conducted before all the GameStop stock drama. That said, millennials are usually more willing to invest in stocks when they know what they’re doing (or know what stocks are in the first place).
Savings won overall for this survey question, with 72% of respondents saying they’d rather put their money in a savings account than in the stock market. But this was the case for more women (79%) than men (64%). Historically, women have been more conservative with their finances than men, who tend to be more welcoming of financial risk and more educated about investment strategies.
Another potential reason for these results is the uncertainty and job loss caused by the pandemic, and many may want to have more money on hand than tied up in the market.
Would You Rather… Be Old and Wealthy or Young and Less Financially Stable?
Nobody wants to be ‘old,’ but having more disposable income—and free time if you’re lucky enough to retire—certainly sweetens the pot a bit. This question boils down to personal preference, whether you’d rather be more physically capable but lack time and money or more financially capable but lack the physical capability or energy.
Longevity is the priority, people. Take care of yourselves now so you can continue to enjoy life long into your post-retirement years. Better still, achieve the best of both worlds by working toward financial independence or FIRE (financially independent, retire early)!
Overall, our data shows that millennials would rather age and be rich than maintain their effervescent youth with a smaller bank account. More women than men said they’d prefer to grow old, with 71% of women preferring to be wealthy geriatrics compared to 57% of men.
5 Financial Goals for Millennials
While millennials may have diverged on some of their “would you rather” answers, 91% said they anticipated doing the same or better financially in the year ahead. That’s not too lofty of a goal.
If you have similar aspirations and hope to work toward reaching your money goals, we have five ways to set yourself up for financial success this year. Here are five financial goals for millennials.
1. Create a Budget and Stick To It
Creating a budget can help you save money and avoid making unnecessary purchases. Take time to gather all your financial documents and assess your situation. From there, calculate your income, tally up your essential monthly costs, and see what’s necessary (i.e., rent, utilities, groceries) and what you can cut out (i.e., streaming subscriptions, that new pair of boots you want, trips to the bar). You want to create a budget that you’ll be able to follow, so make sure that it’s realistic and takes into account both your fixed and variable costs. You can use several different budgeting methods, so you’re sure to find one that works for you.
2. Get Out of Debt
To get out of debt, find a debt payoff method that you know you’ll be able to stick with. A couple of popular do-it-yourself repayment strategies are the debt snowball and debt avalanche methods.
With the debt snowball method, you’ll continue making minimum payments on all of your debt accounts except the one with the smallest balance. For that account, you’ll put all of your extra money toward paying more than the minimum every month until it’s fully paid off. Once that’s done, you’ll focus on paying off the next smallest balance, and so on. This easy-to-use debt snowball calculator can help you get started.
With the debt avalanche method, you’ll continue making minimum payments on all of your debt accounts except the one with the highest interest rate. For that account, you’ll put all of your extra money toward paying more than the minimum every month until it’s fully paid off. Next, you’ll focus on the account with the second-highest interest rate, and so on.
3. Invest for Your Retirement
Investing in your retirement now can pay off big time in the future. You’ll want to make sure to start early, as waiting to start saving means you’ll be missing out on compound interest, which is when the interest earned on the money you’ve saved earns interest
Your ideal retirement asset allocation will be a mix of bonds, stocks, and cash. However, the risk tolerance typically decreases with age, so your allocated amounts of each could change over time. Remember to take a look at your 401(k) if your employer offers it. Don’t assume that the contribution rate you’re enrolled in automatically is the best choice for you. It may make more sense to contribute the maximum amount, especially if your employer has a match program.
4. Create an Emergency Fund
Having an emergency fund on hand can be a huge asset should the unexpected occur (like a pandemic). You’ll want to try and save three to six months of expenses for a rainy day, though a year’s worth of expenses is even better. This way, you’ll have enough savings stashed away to cover something unpredictable like a car accident, home repair, or medical emergency for you, your child, or your pet.
5. Develop Good Credit Habits
The ability to manage your credit is essential for financial success. Your credit score is calculated with data from 5 different categories: payment history (35%), amounts owed (30%), length of credit history (15%), new credit (10%), and credit mix (10%). Paying on time and watching your credit utilization ratio (more on that below) can give your score a big boost.
- Pay over the minimum: You should consider paying more than the minimum amount on your monthly bill. This can help you owe less in interest and pay off your debt quicker.
- Sign up for automatic payments: Your payment history makes up the largest portion of your credit score. Signing up for automatic payments or reminders can ensure that you don’t miss a payment and ding your credit score.
- Sign up for balance alerts: If it’s difficult for you to track how much you’re spending with your card, you can sign up for balance alerts. Many issuers offer the option to receive an alert when your spending hits a certain amount or when it comes close to a certain percentage of your credit limit. Your credit utilization ratio is the amount you’ve spent compared to the total amount of credit available and should ideally be less than 30%. Setting an alert for when your spending approaches that amount can help you keep your credit under control.
- Consider a 0% APR card: Cards that offer 0% introductory APR don’t charge interest on purchases for a promotional period, often anywhere from 12 to 21 months. If you plan to carry a balance, this can save you big time on interest. However, it’s worthwhile to note that once the promotion is over, the regular APR rate will kick in.
- Be strategic about rewards: It’s important to be strategic about earning rewards and picking a rewards card that best matches your spending habits. Cards typically fit into two reward types: they either offer bonus rewards on specific or rotating categories or offer flat-rate rewards on all purchases. You may want to use a bonus rewards card for the categories where you know you spend the most (such as restaurants or gas) and a flat rate for everything else.
Millennials, will this be the year you reach your money goals?
While the pandemic has certainly put a damper on things, there is no better time than the present to begin working toward the things that matter most to you.
We surveyed millennials to see their money resolutions and thoughts on their financial futures. Here, we’ve shared some of our favorite questions and results, as well as some tips for millennials to get on track this year. For more details on the survey and to know more about the statistics, read millennials share their financial resolutions.
Now that you know what other millennials are thinking and some financial goals for millennials to strive for this year, what money goals will you tackle?