Unfortunately, Young People are not as Financially Literate as They’d Like to Believe.

Many millennials think they have it all figured out, but according to a recent study (https://www.cnbc.com/2017/02/14/millennials-arent-as-smart-about-money-as-they-think.html) on financial literacy, they not nearly as clever when it comes to money management as they would like to believe. Only 8 percent of 5,500 Millennials surveyed demonstrated a high level of knowledge when it comes to managing finances, while less than a quarter had a basic understanding.
What are the things these young people are doing wrong while preparing for the future?
1. No budget
Knowing how to budget is absolutely essential for financial success. Budgeting helps you to keep track of your money instead of looking at your bank account and wondering where it all went. It helps you to live within your means, while allocating money to other important areas of your life.
2. Being too optimistic
Millennials have high expectations; many young people graduate from college, expecting to land a great job quickly and establish a lifestyle that reflects that. Financial stability takes time and patience and a lot of persistence.
3. Not setting goals
Financial goals, such as “I want to make X dollars per month” or “I hope to save X by the time I’m 40” are very important but you also need to create lifestyle goals. These goals help you to know where to allocate additional funds once you’re making them, not just spend them mindlessly, as is the tendency as income increases.
4. Not saving for retirement
Many young people make the mistake of thinking retirement is so far off that it’s pointless to start saving now. That’s wrong: it’s never too early to save money. Two-thirds of Millennials plan to retire by 65, but 70 percent have not started saving for it. It’s important to take advantage of matching contributions offered by employers.
5. No emergency fund or insurance
Rainy days extremely important. They are no fun to consider, but they are part of reality. It’s smart to save a good bit of money (at least $1,000, but ideally 2-3 months’ worth of expenses) for emergencies.
With over 36 years of experience, our team at Financial Consulting Group understands that your financial needs change as you transition through life. In life, we pass through several phases, each with different financial requirements and our team at FCG can help you through those phases. Visit our website to learn more: www.fcgno.com