If you’re a part of one of the younger generations in the workforce, whether it be Generation X or the Millennial generation, there’s a good chance you’ve been lectured once (or twice) about the state of your finances.
Of course, you’re not solely responsible for the spending habits, be they responsible or reckless, of your peers. But you are responsible for your own financial well-being, and that is something that you should certainly be taking serious at this point in your young adult life.
In this blog, we’ll be taking a look at some of the good, the bad, and the ugly when it comes to the finances of young adults, as well as providing a few tips which you can implement in order to help build wealth as a young professional and experience peace of mind with long-term financial security.
The Bad And The Ugly
For the purposes of this blog, we’re going to go ahead and combine “the bad” financial statistics with “the ugly,” as they essentially walk hand in hand. We’ll be getting some help from our friends over at the National Financial Educators Council, which provides financial literacy statistics using polls, surveys, and additional forms of research in order to educate the general public.
Remember, as a young adult, it’s not too late to turn things around and get back on track toward financial freedom and peace of mind. There are some valuable steps you can take to reverse the trend and buck these statistics. But more on that later. Now, let’s take a look at the bad/ugly.
- 54 Percent: According to the NFEC, this represents the amount of Millennials who say that debt is their biggest financial concern. With student loans on the rise (they have now eclipsed the $1.3 trillion mark in the United States), it’s no wonder.
- 41 Percent: For the slightly older professionals in America representing Generation X, this is the amount which indicates that they expect their standard of living to decrease in retirement. This is likely due to the lack of retirement planning among these generations. In fact, another statistic indicates that there is a $6.6 trillion gap between where the current level of household retirement savings in the United States and where they should be in order to maintain a certain standard of living.
- $10,000: Nearly half of Americans, 46 percent to be exact, said that they have less than $10,000 saved for retirement. This correlates with the statistic which indicates around 56 percent of Americans have no “rainy day,” or emergency funds.
- 40 Percent: The amount of young adults in college who will likely never gain a net worth in excess of $10,000, according to the American Dream Education Campaign.
These types of statistics are harrowing, to be sure. But there is light at the end of the tunnel. With financial literacy, as provided through organizations like the NFEC, and smart money management, you don’t have to be just another statistic as a young professional. Instead, you can take important and realistic steps toward financial freedom and security. For the more positive statistics, stay tuned and follow these steps.
On the flip side, there are some more promising statistics on the rise when it comes to young adults and saving money. In fact, we covered some of those in our blog titled “How Millennials Are Becoming Better Savers.” The gist of it says that a larger portion of millennials actually had enough money saved up to cover them in case of emergency for three to six months. In fact, around 27 percent of millennials said they had enough money to survive on for that period of time if their income was cut off, compared to just 11 percent of baby boomers. Here are some other good statistics regarding the financial literacy and well-being of young adults.
- 34 Percent: The amount of parents who taught their children how to balance a checkbook and the basics of finance. Of course, this would be more promising if it were higher, but it’s a good start and bodes well for the future generations.
- Thousands Upon Thousands: The amount of surplus retirement savings for those who have had financial education. These individuals tend to participate in retirement plans, make larger contributions, and ultimately achieve financial security more often than those who had no education.
- 19 Percent: The average amount of annual income saved by the millennial generation. That exceeds the amount saved by Generation X (14 percent), Baby Boomers (14 percent), and Seniors (12 percent).
What Can You Do
So, what steps can you take to achieve peace of mind as a young adult or middle-aged professional? There are plenty. Here are just a few suggestions, brought to you by Tactical Wealth and the Fixed Income Fund.
- Budget: Consider all of the financial factors you have, from your expenses to debt and any other costs you might incur on a monthly basis. Then, you can plan your budget accordingly and build in a certain percentage of your monthly income that you will contribute to your retirement and/or savings accounts.
- Emergency Fund: Remember that earlier, the statistics indicated that millennials were doing a better job of saving those emergency funds. Keep that tradition going strong and make sure that you have money in case of any unforeseen circumstances.
- Contribute: At this point in your career, you should have a 401K, IRA, and/or another retirement account. If not, it’s imperative that you start one today. You should be contributing at least 3-5 percent of your annual income into your retirement accounts, and gradually increase that percentage as you get older. That will help you compound savings and contribute to your future financial well-being.
- Invest: It might be a good idea to consider investing as a young professional as well. From simple investments to more risky ones, you could be generating more wealth for your future self if you are doing things the right way. If you are looking for a simple, efficient investment which can help you generate a stable, consistent monthly income, then look no further than the Fixed Income Fund from Tactical Wealth.
To touch on that last tip one more time, the Fixed Income Fund is a smart investment which offers flexible terms and no management fees eating away at your returns. Our investment is a beneficial, annuity-like fund which can help you achieve peace of mind at any stage in life. You can use your 401K or IRA account to make your initial investment, and then reap the benefits of a fixed annuity without the confusing terms or hefty management fees. Contact Tactical Wealth today to learn more.