Millennials Struggle to Build Credit
Having reached their adulthood during the recent economic recession, millennials in the workforce are now making some interesting choices concerning their financial stability, many of which have economists and financial experts concerned. Although the economy has continued to improve over the last several years, there continues to be some mistrust with the financial system currently in place in the United States. However, the uneasiness and the millennials’ actions are not as inappropriate as it may seem.
Because the economic recession took place around the time that many millennials began their professional careers, this generation of workers has a slightly different perspective about their finances than generations of the past. Millennials, or those individuals currently in their 20s and early 30s, are facing an uphill climb when it comes to their economic stability.
Millennials Face College Debt, Few Job Options and Lower Salaries
Many people in this generation have a mountain of student loans accrued from their college educations. A recent study indicates that the average student loan debt is approaching 30,000 dollars. In addition, many millennials struggle to find steady employment in their fields of training. Despite being one of the most educationally prepared generations, these millennials were released into an economic climate with fewer jobs with lower salaries. This combination makes it almost impossible for these individuals to repay their student loans, live comfortably and even consider saving for their retirement.
Millennial Salaries Are Stagnant While the Cost of Living Is Rising
Even those millennials that manage to find employment quickly after college are finding that the salaries are not what they had envisioned for themselves. Starting salaries for most jobs that just get the college graduate’s foot in the door are much less than they were even 20 years ago, adjusted for inflation. To make matters worse, the cost of rent, food and other living necessities continues to climb. Millennials, new to the job market and to living independently, are expected to pay more to survive while earning lower salaries than the previous generation.
Millennials Have Little Credit and Few Chances to Increase It
During the recession, many millennials thought it would be best to avoid opening a credit card. However, that avoidance has left them with little to no credit history. When these millennials miss a single student loan repayment or medical due date, their credit scores often take a major hit.
Millennials See Their Parents Struggle to Save and Retire
Millennials are also jaded by watching their own parents lose sizable investments and retirement assets due to the recession. These parents may have saved for years for their eventual retirements, relied on social security savings or simply believed that they made enough money to survive, only to find that the recession took their jobs and wiped their savings. With little income of their own, along with a slanted view of the economy from their parents’ perspectives, it is little wonder that millennials are looking for unusual means of supplementing their modest finances.
Millennials Are Not Alone in Their Nontraditional Financial Choices
Although millennials are often ascribed the stigma of using risky methods to pay their bills, they are not the only people seeking financial assistance. According to a survey conducted by the Global Financial Literacy Excellence Center at George Washington University, nearly 40 percent of all U.S. households in 2013 contacted and used an alternative financial service. Such nontraditional services include pawnshops, rent-to-own products, car title loans and payday loans. Millennials used these options slightly more often, at 42 percent of the demographic.
Nontraditional Loans Can Bridge the Gap for Struggling Millennials
While detractors claim that using a nontraditional funding method will only lead to more debt, many millennials are actually discovering the benefits of this method. Because these individuals are already strapped with massive student loan debts, and many of them have used maxed out their credit cards or have poor credit history, they are often left with very few options to survive between employment opportunities or between paychecks.
Nontraditional Loans act as short-term options that can help these millennials in the times when they are searching for a more lucrative employment option or when they are trying to pay their bills between paychecks. More information about these and other economic topics can be found at PersonalMoneyStore.com.