In the age of the internet, there is a plethora of information about an infinite number of topics; and a range of age generations surfing the web. For this blog post, we focused on the Millennial generation and what they are talking about. Believe it or not, Millennials are interested in much more than just the Kardashians or the latest makeup and fashion trends. We used the Addy tool to organize Reddit's' large volume of information to find out what Millennials are saying about personal finance. It turns out, it is a booming topic.
Millennials are not choosing to keep their information to themselves, rather utilizing their experiences to give their generation a major reality check. The Addy tool gave us this great insight into, Refinery29's Money Diaries. According to the source, Money Diaries are made up of mainly Millennials from different walks of life discussing how they spend their money. "It's interesting because it allows people to see how others in different locations, at different ages, earning varying amounts of money and with different habits spend their money. It provides a lot of insight and reflection being able to read about someone's budget when they live in Nebraska earning 20k, vs another person earning 450k in Dallas." [1*]
Private VS. Public Universities
Millennials are advocating against going to the best universities. They believe that by attending an affordable public university, that will provide them with a better financial return in the long run. Take this Millennial, recalling a discussion about the return on the investment of college versus career choice. "Nothing in-depth, at the very least a discussion on average salary vs the cost. This was the discussion of college for me at my house: Private vs Public university. The numbers - for the same information - were just so jarring to me. I went public." [2*] And this person sharing their opinion, "Go to community college first. Get good grades and transfer to an in-state school. Transferring to “best” in-state school is not necessarily what you should aim for. Go for an in-state school you can afford. Keep student loans down as much as possible. Work through school and pay cash if possible." [3*]
Reality Check: Go private, and the majority of your paycheck post-college will probably be going to pay off your student loans. Go public, and the majority of your paycheck post-college could be going in your pocket.
Budgeting to Improve Credit Score
We all want to get rid of our debt as soon as possible to improve our credit score. However, while debating how much will go into paying debts, keeping our Netflix/Hulu account and how much will go in savings each month will slow the process down immensely. Addy found that many Millennials are using budgeting to eliminate financial stress. "First you want to educate yourself and become competent at managing your personal finances. Don't pay to use other people's money. Put as much of your own as you can to work earning for you. If you do these two things, you'll keep more of what you earn, and use what you've earned to earn more. How? Budgeting and savings, once you have your budget and you have automated savings going on and you've addressed any debts, you can concentrate on building credit history and score." [4*]
Reality Check: To fast track personal finances from debt to debt-free, start by budgeting for the essentials only (Netflix/Hulu not included) and put the rest into paying off debts. Once debts are paid off, budget for the essentials and put the rest into a savings account. Once your savings account goals are achieved, you can include Netflix/Hulu in your budget.
Hight Interest & Credit Cards
Additionally, Addy found that the two top topics were high interest and credit cards. This finding gave us further insight into the type of advice Millennials are giving each other. Like this one, regarding credit card (CC) payments, "You are costing yourself extra every month in interest. With the balances killed and only necessary spending that you have budgeted for being put on the cards, it will be easy to rebuild your savings simply by putting what you would have been paying monthly against your CC debt towards savings. After that, treat your credit cards as debit cards - don't put anything on there that you can't pay off at the end of the month. [5*] On average credit card interest rates range from 15% to 26%, in monetary value that translates to a monthly fee of $15 to $26 for every $100 of credit card debt. Make sure your credit card balance at the end of each month is $0, that way you can apply what would have been credit card interest to your savings each month.
Reality Check: To build or improve credit score without having to pay your credit card company each month is simple. Only charge your credit card for the amount you have funds available for. Pay off the credit card in full as soon as you utilize it to avoid accumulating new debt.
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