Younger generations are leaving school and entering the workforce. They should feel like they are reclaiming themselves.
But two new studies suggest otherwise.
Nearly one-third of young Americans (33% of Gen Z and 36% of millennials) are ready to manage their finances, according to a new MassMutual survey of 1,000 U.S. adults conducted in May. I feel inadequate.Meanwhile, recent Experian research Nearly 70% of Gen Z and millennials “believe that the current economic climate is impairing their ability to become financially independent adults,” the study found.
The results reflect tough economic conditions, especially inflation that young people have not experienced until recently. The survey also suggests they are looking for ways to combat financial uncertainty to move forward.
“We all see it when we fill up our gas tanks, when we go to the grocery store, when we pay our heating or electricity bills. Mutual’s head of insurance operations, Amanda Wallace, told Yahoo Finance. “It’s really unnerving for the American public, and frankly younger generations are even more worried.”
Current economic challenges are severely impacting Gen X and millennials.
According to the Mass Mutual Survey, their main concerns are the impact of inflation (88%) and a potential recession (81%). Wallace also pointed out that student loans and astronomical housing costs add to the financial hardships of young people.
The number of Americans concerned about student loans rose from 34% last quarter to 40% this quarter as federal student loan moratorium ends in September, according to MassMutual survey He pointed out that he did.
“When you start thinking about student loan suspensions and resuming payments, you’re already at your limit,” Wallace said. “Now payments, student loan payments are coming back. That’s what’s making them so nervous right now.”
Housing is also difficult. About 70% of Americans are concerned about the impact of rising housing costs, according to a MassMutual survey.
“We’ve all seen a housing market where the cost of housing has risen. This is the generation that has been really cramped financially over the past few years,” Wallace said. “And some people who bought a home are starting to regret it because it puts more strain on their budget.
As a result, young people are looking for ways to improve their economic situation.
Experian’s report surveyed more than 2,000 millennial and Gen Z consumers and found that more than three-quarters “seek to increase their financial literacy.” On the other hand, about the same percentage said they would be more optimistic about their financial situation if they had a better understanding of their personal finances, and nearly 70% were willing to seek reliable sources for their personal financial information. looking to
Wallace advised Gen Z and millennials to start by taking stock of their finances.
“The big takeaway from this report for me is that I need to educate myself,” Wallace said.
She recommended writing out all your debt and monthly expenses on an Excel spreadsheet or on paper. Next, she said, you need to assess the difference between your income and your expenses. She should also set aside enough emergency funds to cover six months of basic living expenses, and then focus on long-term retirement savings.
“If your company offers a 401(k), you should set aside at least a minimum amount of money to get a match with the company. It should,” Wallace says. “And you have to think of it that way. It’s not an afterthought.”
Jack Heintzelman, a financial planner at Boston Wealth Strategies, also stressed that getting organized could help people interested in improving their credit scores.
“The biggest problem with credit scores is when you miss payments or have outstanding balances that we didn’t know about, even if they’re small amounts,” he said.
As millennials and Gen Z struggle to adapt to economic hardships, they are turning to artificial intelligence. According to a MassMutual survey, “15% of Americans have used AI in banking, investing or making other financial decisions, with Gen Z (37%) and millennials (27%) are leading the.”
Wallace warned America’s young people to be wary of AI, saying ChatGPT is error-prone and won’t replace financial planners, at least for now.
“ChatGPT cannot help you make the right choice for you or protect your financial future. It is a great tool, look at the sources carefully,” she said. “Speak to a professional who can help you make really big decisions.”
Dylan Kroll is a reporter at Yahoo Finance.
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