Millennials Are Stressed About Money: Here’s Why
It seems like millennials and student debt go together like avocados and toast. The millennial generation is cash-strapped , facing high amounts of student debt and high housing costs. The result is a generation that is constantly worried about money.
A majority of millennials are dealing with significant amounts of debt—and it’s keeping them up at night. A SoFi survey of its members found that 83% felt like their student loan debt kept them from relaxing.
Whether you’re waking up in a cold sweat after dreaming about your monthly balance or feeling wracked with guilt every time you swipe your credit card, looming loan payments can feel overwhelming.
With 29.1 million student loan borrowers under the age of 39, millennial student debt is higher than any previous generation’s. It is no wonder that many millennials feel anxious about managing loan repayment.
As if high student loan loads aren’t enough, millennials are also dealing with lower wages and higher housing costs. Millennial salaries are, on average, 20% lower than baby boomer salaries were at the same stage of life, which isn’t making it any easier to pay back debt.
Luckily, there are steps you can take to help manage your finances and minimize your money stress.
Financial Well-Being Is Possible
Just like physical and mental well-being, financial well-being requires work, and developing healthier financial habits can potentially help minimize money worries. Think of it as financial self-care: a dedicated practice to keep your finances on track.
One way some people deal with financial stress is through avoidance. But before you get in the habit of blindly handing over your debit card at the checkout and hoping for the best, remember that the first step on the path to financial health is knowing exactly where you stand.
Many people find that having a dedicated day and time to check their bank account helps keep them on track without the dread that comes with each refresh of your account balance screen. For example, maybe you choose to check your bank account each Monday morning and make a plan for your money that week.
It’s Never Too Late to Get Ahead
Another consequence of money anxiety can be feeling like you’re too far behind to get ahead. The good news is that just like working out, financial fitness is for everybody and you can start at any time, whether you’re just dipping your toe into money management or you already have a 401(k) and stock portfolio.
If you’re dealing with high levels of debt or a lack of sufficient income, there are still things you can do to improve your finances, like finally asking for that raise you think you deserve or maybe securing a better interest rate on outstanding loans.
Of course, a crucial step is figuring out exactly what’s going on with your money. Once you’ve conquered regularly checking in on your bank account, a next step could be to schedule a time to sit down and look over all your outstanding debt, including student loans, credit cards, and any mortgages or car payments.
The idea of looking at all those negative numbers might seem daunting, but the payoff can be huge. For example, some people find that they are on an inadequate student loan repayment plan or have a credit card in default. These issues can seem stress-inducing, but if you can handle the most stressful things first, the rest of that pile of paperwork likely won’t seem quite so bad.
Once you’ve found any financial fires to put out, then you can focus on implementing a smart strategy to get on track. Let’s be real: Creating and sticking to a budget sounds like a major drag.
Not many people want to add up their weekly groceries down to the penny or give up buying a weekly fancy latte in the name of financial health, but instead of thinking about what a budget might prevent you from buying, it can be helpful to think about what a budget can help you attain.
After all, the purpose of a budget is to help you reach your financial goals, whether that is to pay off your debt or simply to feel less guilty when you eat out.
Another budget-perk is that there is one to fit every single lifestyle: You can track every penny or merely cut back in a few areas. An important thing to remember when choosing a budget is to make it realistic for your personal circumstances.
Loan Refinancing May Help Ease Financial Woes
One other thing you can do to mitigate money worries? Look at your options when it comes to lowering your monthly payments and the amount of debt you’re paying off.
For example, if you’re paying off credit cards with sky-high interest rates, you may be able to save some serious cash by transferring the balance to a lower-interest card or even by taking out a lower-interest personal loan to pay it off.
The same is true of student loans. As interest grows and compounds during your payoff period, you could very well end up paying more money over the life of your loan. You may feel stuck with whatever interest rate you qualified for when you originally took out your loan, but your options may have changed since then.
If you’ve managed to increase your credit score or land a higher-paying job, and improved other aspects of your financial picture, you may be able to qualify for a better interest rate by refinancing your student loans. Refinancing your loans might help you secure a lower monthly payment or better repayment terms over the life of your loan, which can help you better tackle your outstanding student loan debt.
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Notice: SoFi refinance loans are private loans and do not have the same repayment options that the federal loan program offers such as Income Based Repayment or Income Contingent Repayment or PAYE. SoFi always recommends that you consult a qualified financial advisor to discuss what is best for your unique situation.
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