Many millennials are making financial progress but still feel stressed out when it comes to their finances, Bank of America’s 2020 Better Money Habits® Millennial Report reveals.
So why do so many millennials feel like their financial efforts aren’t enough? Here are some highlights from the survey.
- Millennials are saving — and they’re saving bigger amounts than they used to. According to the survey, nearly three-quarters of millennials are saving in 2020 — a number that’s increased since the 2018 survey. And in 2020, more than half of respondents have at least $15,000 in savings, another increase from the 2018 results.
- What are millennials saving for? Many respondents say they’re saving for retirement or building emergency funds. Some millennials say they’re saving for a first or new home or are putting money away for their child’s education.
- Millennials are improving their financial health … In the past year, many millennial respondents achieved certain financial goals, including improving their credit scores, getting a raise and reducing their monthly spending.
- … But debt is keeping them from some milestones. Three-quarters of millennials surveyed have debt, which affects them in different ways. Some said their debt holds them back from buying a home, while other respondents said their debt means they can’t save for the future or it affects family planning or getting married.
- Many millennials feel like they’re behind. Half of respondents feel behind in their finances, while a third of those surveyed say they feel their peers are doing better than them. And most millennials aren’t optimistic about their financial future.
Past Credit Karma surveys reveal similar results: More millennials have high-yield savings accounts than members of other generations, but they’re also dealing with burnout that makes it tough for them to think about their finances.
How can you relieve financial stress?
If you’re making smart financial moves like paying down your debt and building up your savings, yet you still feel stressed about money, the latest Bank of America survey findings might resonate with you. Here are some tips that could help relieve financial stress.
- Make a budget. The budget you set could be could be as simple as the 50-30-20 method, where 50% of your budget goes toward necessities, 30% goes toward whatever you’d like, and 20% goes toward paying off debt or adding to your savings.
- Automate payments. It’s easy to forget to make a payment on an account or put away savings. That’s where automation comes in. Setting up automatic monthly payments on your credit card and loan accounts for at least the minimum due will help you avoid late fees. And setting up autosave with your bank or credit union to transfer funds from a checking to a high-yield savings account can be a way to make sure you’re putting away some savings each month.
- Check your tax withholdings on your W-4. Your W-4 is a tax document that specifies how much of your paycheck your employer withholds for taxes. Make sure your withholding amount is correct. Doing this can help you either avoid a large bill when you pay your taxes or keep more of your take-home pay throughout the year.
You can check out some other tips on dealing with financial stress from the American Psychological Association.