Millennials are quickly becoming the largest age group in the workforce as baby boomers retire, but they’re not investing in the future.This could be because pension plans are declining, according to The Center for Retirement Research at Boston College. Here are three things to know about millennials, saving, and investing.
More than half of millennials say they do not have an emergency fund, according to a PNC Investments survey. A rainy day fund is a savings fundamentals because it’s a critical safety net when life happens and you’re hit with an unexpected expense. Things like parking tickets, flat tires or medical bills will pop up, and you want to have money set aside when they do.
Start by saving at least $500 in a separate savings account. An easy way to reach your savings goal is by setting up automatic savings into your account. This way, you’ll never miss a savings deposit and your savings account will increase each time you get paid. >> Learn more about emergency savings.
Two out of three surveyed millennials said their parents encouraged them to save, but only half say their families showed them good money management.
This is important because the way you manage money is largely impacted by what you were taught about finances. For example, if you have always lived by the idea that “money is meant to be spent, not saved” you might have a hard time saving. If you were taught that credit cards are meant for large purchases, you might always run up a large credit card bill.
When you hear that millennials aren’t saving for emergencies, it’s no surprise that they also say they weren’t taught good money management skills. The good news is, it’s never too late to take control of your finances and start saving.
You can start small, and think big. By saving just $25 every week, you can save $1,300 in one year. >>Take the America Saves pledge and start saving today.
According to the PNC Investments survey, millennials are more focused on saving money than investing.
When millennials put money into their liquid savings account, they can see it growing each time they make a deposit. They can also access the money instantly, like they access almost everything else instantly.
When it comes to investing, they can’t access the money immediately. They also have to wait a long time to see the results. That can be a little daunting.
If you’re a millennial and you’re nervous about investing, you can start by opening a 401(k) retirement savings plan if your employer offers it. They might even match your contributions each time you get paid. Your 401(k) will grow over time through compound interest and you don’t have to do anything with it. If your employer does not offer retirement savings, you can also open a Roth or Traditional IRA, or individual retirement account. >> Learn more about saving with a 401(k ) plan.
The sooner you start investing your money, the more it’ll be worth later!
Let America Saves help you save money and plan for retirement. It all starts when you make a commitment to yourself to save. Take the first step today and take the America Saves pledge to save money, reduce debt, and build wealth over time. And it doesn't stop there. America Saves will keep you motivated with information, advice, tips, and reminders to help you reach your goal. Think of us as your own personal support system.
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