Do Millennials Struggle With Finances? Let’s Find Out!

By | April 4, 2020

Millennials are right there, young enough to adapt to modern ways yet old enough to have had a taste of simpler times. But are they good with finances? Let’s discuss!


It’s been 16 years since the turn of a millennium. From the year 2000 till now, mankind has taken giant leaps in terms of technological development, medical advancement, space research, financial growth and much more. Internet, which was in its infancy during the turn of the millennium has now reached out to billions of people and has become a way of life. The phenomenal boom in Social Media has ensured that everyone from kids to old timers are hooked to Facebook, Twitter, Instagram, etc.

The kids and the adolescents who witnessed the world’s drastic transition from one millennium to another, have now become young adults in their 20s and are often referred to as millennials. Deeply influenced by the phenomenal changes that they have experienced in the last decade and a half, this breed of millennials is quite different from their previous generations. Millennials are quick learners, great with electronic gadgets and are equipped to handle technological advancements that others fail to grasp. But there are a few things which millennials struggle to deal with. One such thing is financial management.

The art of handling money and making it grow is something that millennials have failed to understand. This lack of awareness regarding money is frustrating to see and it can lead to big financial troubles in the future. We, at BankBazaar, have decided to list down 9 worrying signs of money mismanagement by millennials and also give tips on how to rectify these mistakes. It is to be noted that these signs of financial mismanagement are targeted to a vast section of millennials but it is not meant to generalise every millennial as individuals who struggle with money. We understand that there might be exceptions too (a lot of them).

  1. Millennials don’t understand the power of investing early

We have all solved compound-interest problems while studying math in school. But we tend to forget its practical application in real life. According to research, millennials indulge in investment late in their careers without understanding the benefits of investing early. Thanks to the magic of compound interest, your money grows exponentially depending upon the number of years you have invested your money. So the sooner you put your money in good yielding investment schemes, the faster your money will multiply. But unfortunately, the sedentary lifestyle of millennials forces them to lead a hand-to-mouth existence in the initial years of their career. And thus, they miss the opportunity of making their money grow considerably.

Tip: Right from the day you start your first job, follow the motto of spending less and saving more. Instead of splurging on a luxurious lifestyle, focus on saving at least 30% of your salary and invest half of your savings regularly in schemes that offer good returns with minimum risk of loss.

Additional Reading: Teens & Money Management

  1. Millennials struggle with debt repayment

According to sources, student loans and Credit Card bills are the two most common type of debts that millennials have to deal with. And research shows that they are not very efficient when it comes to debt repayment. Thanks to their consumerist way of life, millennials often find themselves struggling to clear off their debts. Their over-dependency on credit makes it even harder for millennials to lead a debt-free life. Defaulting on debt repayments shows up badly in their credit history that damages the Credit Score. Most of the millennials are unware of different ways of paying off debt like refinancing loans or balance transfer of Credit Cards that could help keep their head above the water.

Tip: If you are already struggling to clear off your Credit Card debt, it is necessary that you put aside your Credit Card for a while and focus on ways to clear off the debt. Transfer the unpaid balance to a new Credit Card which offers 0% APR for a certain period of time. Make sure that you don’t use the new Credit Card for purchases but only for clearing off the debt before the offer period of 0% APR runs out. Similarly, refinance your student loan by opting for a new loan with a lower interest rate and lower EMIs.

  1. Millennials don’t bother to find which Health Insurance policy is best for their family

Millennials are creatures that live in the present, often unprepared for what the future holds for them. Health Insurance is an essential part of future-financial planning that takes care of your family’s medical needs in case of emergencies. But unfortunately, Health Insurance is not a priority for millennials as they are busy with their hand-to-mouth existence. And since most companies offer medical insurance to its employees and their families, millennials are least bothered when it comes to buying Health Insurance. Millennials fail to understand that it is still essential to go for a Health Insurance policy that covers their family’s medical needs as the medical insurance provided by the employer may not cover all bases. E.g. there are some medical insurance policies that don’t cover illnesses caused due to diabetes or high blood pressure.

Tip: Conduct a thorough research in the market of insurance providers and select the Health Insurance policy that best suits the needs of your family. Paying premiums for Health Insurance will ensure that you don’t have to panic when a medical emergency strikes and it also helps in tax deduction.

  1. Millennials don’t have retirement plans

Retirement is a phase that is inevitable in a person’s life. And since the thought of leading a life with no income sounds scary, a lot of people invest in retirement plans. But millennials are too busy living in the moment that they don’t think about the future and certainly not about life after retirement. It is a worrying trend that millennials don’t have retirement plans and they fail to prepare themselves for the financial instability of old age. Apart from the contribution to Employee Provident Fund that is deducted from their income, most millennials are clueless about retirement plans. If this trend continues, coupled with growing inflation, then we are looking at a future where millennials will be struggling to keep up with the financial needs of life post-retirement.

Tip: The solution is simple. Educate yourselves about different retirement-plan options that are available in the market and slowly start investing in different schemes that will create a good financial repository by the time of retirement. Keep in mind the growing inflation and invest generously in retirement plans.     

  1. Millennials have no emergency fund for a bad hair day

Apart from investing in the future, it is crucial to save money and create an emergency fund to tackle financial uncertainties. From unfortunate accidents to a sudden loss of job, you need money to deal with emergency situations. But, millennials lack this planning for a bad hair day as they live in the moment assuming that nothing bad will ever happen to them. But when financial emergencies arise, they find themselves unprepared, often running from pillar to post looking for monetary help from all possible avenues. And in the process of looking for financial aid, they tend to add up more to the pile of debt that they are already struggling to repay.

Tip:  We had mentioned earlier about saving 30% of your monthly income and invest half of it for a better future. The other half of the savings should be used to create an emergency fund that will be useful when financial trouble strikes. Create an emergency fund that can help you sustain for at least 6 months without income.  

Additional Reading: 8 Ways To Save More Money Every Month

If you are a millennial and have related to what you have just read about money mismanagement, it is time to regain control of your finances by rectifying the above-listed mistakes committed by most millennials. If you master the art of money management, millennials, who are already pioneers of networking and technology will have the complete package. So, how about exploring your investment options? After all, the right time to bring in a change is NOW!

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