Millennials’ financial illiteracy is stressing them out.
At least, BMO Wealth Management thinks so.
In its survey of more than a thousand millennials titled “Generation Why!”, 65 percent said their current financial situation was their biggest concern. That’s more than their personal relationships (64 percent) and their jobs (56 percent).
More specifically, most of those millennials (35 percent) said their biggest financial concern is carrying too much debt.
Against stereotypes about millennials and money, 17 percent worry about purchasing homes and wedding costs, 15 percent fret the costs of raising and educating children, and 13 percent worry about saving for retirement.
Why are they worried?
Millennials may be so concerned about having too much debt because before even entering the workforce, 63 percent have more than $10,000 in student loan debt. Not to mention that 34 percent end up in the hole for school for more than $30,000.
One-in-four who have more than $30,000 expect to take 20 or more years to pay it off, and millennials stress so much about their student debt that it affects their health.
One-in-20 millennials worry about money on an hourly basis. Those with financial anxiety (50 percent) say they worry about day-to-day expenses, (45 percent) unexpected expenses, and (34 percent) student loan debt.
Millennials and money?
How are they saving? Most millennials prefer using a personal savings account (42 percent) over other savings options banks offer like an IRA or 401k (13 percent), or Roth IRAs (6 percent).
To help offset these financial concerns, Stephen Williams, senior VP at BMO Wealth Management recommends the latter options to increase savings.
“IRAs, Roth IRAs and 401(k)s are some of the best plans for helping millennials save for major purchases, such as buying a home or saving for retirement,” Williams said. “Contributions to these accounts grow tax-free or tax-deferred and savings can significantly accumulate over time. I cannot stress enough to millennials the value of utilizing these accounts for retirement planning and also for other means.”
Though using a 401k was one of the least popular ways for millennials to save — and the fact that over a third have said in the past they didn’t know what one was — more have caught on over the past five years.
Millennials want to learn
Millennials are now the largest group in the workforce, and their income should only grow with time.
Data has also shown that millennials are aspiring to go against many of their flighty stereotypes. A survey from Credit Karma revealed results of mature and responsible financial decisions — saving for retirement, houses, and marriage — among 18 to-34-year-olds.
“Survey findings prove millennials are following in the footsteps of generations before them: saving for the future is top-of-mind, loyalty with employers who offer fair pay is a priority and starting a family is important to them,” Credit Karma chief consumer advocate Bethy Hardeman says.
Four out of five (over 80 percent) millennials said they wanted to get married. Eighty-eight percent who do not own a home today hope to purchase one in the future. Over half (58 percent) who do own homes, purchased their first home at age 26.
“As millennials’ incomes grow, financial planning and literacy will become even more important in order for them to achieve their financial goals,” Williams says. “It is imperative for millennials to engage advisers as they start to map out their financial plans, in order to maximize their financial potential in a way that suits their current lifestyle and helps accomplish their aspirations.”
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