Financial Regrets and Solutions for MillennialsFinancial Regrets and Solutions for Millennials Millennials, having faced economic challenges such as the Great Recession and a pandemic, may carry a fair share of financial regrets. To address these, it’s crucial to seek professional advice and take proactive steps. Student Debt * Pay off student loans as quickly as possible. * Explore loan forgiveness programs if eligible. * Check with employers for potential loan repayment programs. Letting a Spouse Manage Finances * Engage actively in financial decision-making. * Request monthly financial snapshots and discuss goals. * Review statements and budgets together regularly. Building Up Credit Card Debt * Cut up credit cards if unable to manage debt effectively. * Pay from smallest to largest balances or highest interest rates to lowest. * Avoid accumulating more debt. Do Not Take Out Private Home Insurance * Insure your home adequately. * Read policy terms thoroughly to understand coverage. * Consider getting as much insurance as affordable. Seek Professional Advice * Consult a financial advisor to review your financial standing. * Seek guidance on retirement planning and general financial well-being. Additional Considerations * Don’t dwell too much on regrets, focus on enjoying life and building a secure financial future. * Leverage earning years to make wise financial decisions and avoid future financial setbacks.
Millennials may have more than their fair share of financial regrets, after all, their prime earning years were impacted by the Great Recession and a pandemic.
Financial regret can sometimes be just a minor setback in your path, but sometimes it can be a major setback.
GOBankingRates spoke with several millennials about their financial struggles and provided advice from Andrew Van Alstyne, financial advisor at Fiduciary Financial Advisors, on how to address these issues before millennials make the final steps toward retirement.
Student debt
Many millennials took out student loans to attend college and have overcome frustrations when the Biden administration’s plans to forgive those debts were challenged and blocked in court.
Teresa, a 43-year-old mother from California, had about $18,000 in student loan debt and now owes more than $30,000.
“Student loans are predatory. The interest rates are super high and kids don’t understand the implications of taking on long-term loans that you can’t forgive through bankruptcy or any other reason,” she said.
Despite her disability, she was unable to get her loans forgiven.
“If I had to do it over again, I would have worked more and done less extracurriculars to pay for school. I would have taken more classes at JC. I would have also applied for more scholarships after my freshman year,” she said.
Van Alstyne advises paying off student loans as quickly as possible.
If you qualify for a loan forgiveness program, take advantage of it, he said. But don’t wait to see what the next presidential administration is going to do. “You don’t want to count on something to materialize. Just bite the bullet, swallow it, deal with it, take it off your balance sheet, stop paying the penalty, whatever the interest is that you owe, and then move on to whatever other goals you have in life,” he said.
The faster you can leave that debt behind, the less traffic there is in front of you to actually accelerate toward what you want to achieve, he said.
Also check with your employer to see if they have a loan repayment program.
Letting a spouse manage the finances
Deb, a California artist, has one big regret: She let her husband handle all the finances and financial decisions while she raised her son (not his child). “I didn’t ask questions about money and trusted him to make the right decisions about all of our finances,” she said.
When her husband left her years later, she discovered that he had lied about how much money they actually had, restricting what she could spend and spending the extra money on affairs with other women. “I know now that it was spousal financial abuse,” she said.
Because she didn’t receive much guidance regarding money as a child and she struggles with dyscalculia, she didn’t feel like she had the education she needed to manage her finances differently.
“Never let someone else manage your money for you. Always have some savings so you can leave a situation if you need to,” she said.
Van Alstyne said this is not an uncommon scenario. “It’s something I hear quite often, and it happens in every age group, demographic generation. It’s giving up power in such an important aspect of life,” he said.
He said that communication is essential if your partner is to take on financial responsibility.
You’ll want to ask for a monthly snapshot of your finances, discuss savings goals and budgets. “And don’t just give one-word answers; review statements together, review budgets together. It’s not something you necessarily have to do every day, but at least once a quarter make sure you’re all on the same page,” he said.
Building up credit card debt
Perhaps one of the most common financial regrets for people of all ages is racking up credit card debt, and the typically high interest rates that come with it. Sarah T., a medical secretary from California, regretted that she and her husband had racked up nearly $50,000 in debt over the course of many years, and were paying hundreds of dollars each month in interest alone.
“I finally got a consolidation loan, paid it off, and now I pay the balance of the account every month. It’s automatic, so I can’t forget,” she said. “I refuse to have any debt, except for my house. It’s way too expensive to borrow money.”
She has taught her children how to use credit responsibly. “They have great credit and no debt,” she said.
According to Van Alstyne, if you have significant credit card debt, the first thing you should do is cut up your credit cards.
“If you have a huge amount of debt, you have already shown that you cannot manage it well at this point, so forget about it. Because at this point you have to answer to yourself, but you have lost the ability to use debt as a financial instrument,” he said.
Depending on the exact amount, it sometimes makes more sense to pay from smallest to largest, he said, creating a sense of satisfaction and accomplishment.
“Other times I like to go from the highest interest rate to the lowest. Pay off the debts that are costing you the most to maintain that debt line, pay those off and then work your way down to the debts that aren’t as expensive,” he said.
Do not take out private home insurance
Nicole K., a 40-year-old nurse in California, bought an apartment in 2007 because people told her it was a good investment. Unfortunately, she and her partner did not purchase homeowners insurance, instead relying on the insurance offered through their homeowners association.
“Then the housing market crashed, the apartment burned down, and we were on the street for 15 months without compensation, which led to us doing a short sale in 2010,” she explained. In all, she said, they lost more than $100,000, and that took a financial toll for the next decade.
Van Alstyne pointed out that a home is typically the largest asset most people have, and that it is vital to protect it. “That’s the place you’re going to have to come back to. That’s a place where you’re going to make family memories. That’s where your sanctuary should be, so you’re going to want to put the right protections in place to make sure that’s there at all costs,” he explained.
He said it’s important to get as much insurance as you can afford and to read your policy terms thoroughly so you know exactly what’s covered.
Ask for professional advice
As millennials head toward retirement, even though it may seem a long way off, Van Alstyne recommends talking to a financial advisor to get a sense of where you stand.
“You can feel like you’re drifting at sea with no point of reference, so at least talk to a neutral third party to get your bearings and see if you’re on the right track,” he said.
But since millennials are still in their most money-making years, Van Alstyne advises not to worry too much about regrets and to try to enjoy life as well.
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