The largest generation in America is “Millennials”. They are born in the early 80’s to early 2000’s so the oldest batch of Millennials would be 35 or 36yrs old. The Millennials are starting to invest not only for their future but also for the future of their children or family. In this article, we will find out how the Millennials are doing in their personal finances.
An Overview Of The Generation Causing All The Buzz
Based on the research conducted, Millennials outnumber their counterpart generation like Baby Boomers by 15 million. According to History.com, Baby boomers are born between the years of 1946 and 1964, ranging their age from 51 and 69 years old. It is easy to say that if your boss is already 50+ years old then he/she belongs to Baby Boomers. Pocket-sized banking is the new trend for Millennials. 80% of them like accessing their financial institutions on their phones and on their tablet or small computers. Also the average income of American Millennials is $30,000 compared to all other generations which is $50,000
The Millennial Credit Portfolio
There are 4 forms of credit that Millennials are most likely to get which are credit cards, student loans, car loans and mortgages. Almost 30% of the Millennials have opened their own credit card accounts. They use their credit accounts to pay off their utilities and to purchase their needs like food, clothes, and appliances. Credit cards are more convenient than cash because of safety reasons. If you have a lot of cash in your hand then robbers can easily spot it. Some credit card companies use promos that can immediately get you the thing that you want and pay it some other time. Most Millennials have kids as of this time and they need student loans to safeguard the future of their children and that is why almost 25% of Millennials have taken out student loans. Only 15% of Millennials have auto loans because some thought that car is only for luxury and they will just put their money to pay off bills in their credit cards or for student loans. On the other hand 3% of Millennials have taken out a mortgage.
Millennial budgets can be categorized into two: first is for their own needs and the second would be for their family. Their first priority is their health, wealth and happiness. The second would be organic food. In order for them to have good health, they need to eat organic food which doesn’t contain any preservatives or substances that can harm their body. Their third priority would be beer or drinks. Almost 90% of the Millennials have tried drinking beer and ending up liking it so it is justifiable. For their family the priority is their house, who would want to sleep on the street right? The second would be cars. Based on the statement earlier 15% of Millennials have taken car/auto loans. The wedding would be the third priority and maybe second special thing that happened after having a child.
Why Millennials Credit Scores Aren’t As High As Previous Generations
The average annual debt for Millennials is $52,120 which includes payment for mortgages. Credit utilization of Millennials is only 43%. They spend more money by consolidating their debts. In addition, only 48% are aware of their credit score and only 38.6% of them have equity in stock.
The Millennial Credit First Aid Kit
Millennials understand and check their credit score, pay bills on time to avoid late payment interest and surcharge, keep their credit card balances low, utilize only 30% of total credit available, diversify their credit by using different credit cards, and apply for open credit only in case of emergency.