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 When the financial crisis hit in 2008, she was getting her geography
degree at the University of Kentucky, but she did not have a plan.
"All the jobs I was looking at paid really poorly, and I wasn't
hearing about anyone getting hired except for internships that paid
less than $25,000 a year," said Belendez-DeSha, 30, now a graduate
student in New York City. "College wasn't paying off at that time
... And I was kind of freaking out about having a financially sound
life."
There was an emerging consensus that so-called millennials - or
people who reached young adulthood around the year 2000 - would face
tougher financial challenges than their parents' generation. At the
same time, Belendez-DeSha saw her father lose money on the stock
market and her mother struggle to find a job.
"When you see your parents try to figure things out, everything
becomes a little iffy," she said.
Belendez-DeSha is not alone. Many millennials have a pessimistic
outlook on their personal finances because of the financial crisis.
According to insurer Northwestern Mutual, 28 percent of millennials
are less comfortable taking risks with their finances than they were
in 2008 and 71 percent prefer to play it safe with investments, even
at the risk of lower returns. Additionally, 62 percent agree that
over time there likely will be more financial crises.
"This generation is particularly concerned, confused and maybe even
a little distrusting," said personal finance expert Farnoosh Torabi.
Here are five financial tips for millennials who are concerned about
their financial future.
TAKE ADVANTAGE OF YOUR AGE
Your youth is one of your biggest assets. Take advantage of your
time and energy to make as much money as possible.
Not all of your income has to come from one source, said Torabi. You
can rent out your apartment via Airbnb, find side gigs at
TaskRabbit.com, a tutoring job via tutor.com and discover freelance
opportunities at upwork.com.
But do not expect to hit pay dirt right away: With a friend,
Belendez-DeSha started a small design business that made no money.
She was also walking dogs, catering and cooking at various
restaurants on the side.
RETHINK REAL ESTATE
During the financial crisis, many parents of millennials thought
that real estate was a safe investment. "Property is just like any
other investment," said Chantel Bonneau, wealth management adviser
at Northwestern Mutual. "Just like buying a stock, it won't always
work out."
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Buy a home because you want to live in it, not because you assume
you will make a profit, experts say. Make sure you are not borrowing
more than you can pay off.
DIVERSIFY
Every four years, a dip in the financial market is expected, said
Bonneau. That is why it is important to diversify your investments.
Examples of different assets are permanent life insurance, rental
properties, emergency funds, cash holding accounts, primary property
and nonretirement investments.
SAVE EARLY AND OFTEN
Bad and unexpected things can happen. Spend less than you earn and
build an emergency fund to cover three to six months of expenses.
Automatically deduct cash from your checking account weekly or
monthly to fund the emergency account.
"The more money you have set aside, the better position you will be
in for whatever life throws at you," said Stuart Ritter, senior
financial planning analyst at T. Rowe Price.
MAKE A FINANCIAL PLAN
Work on your financial plan. Set goals. What is important to you? Is
it having a family or owning property - or both?
Track your cash flow with apps like Mint.com or LevelMoney to see
what comes in every month and what goes out. That will provide
financial clarity.
(Editing by Lauren Young and Matthew Lewis)
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