Where the Wealthiest Millennials Stash Their Money

There’s been much talk about millennials being fearful of the stock market. They did, after all, live through the financial crisis, and many are shouldering record levels of student loan debt, while grappling with rising fixed costs.

The truth is that historically, young people have always shied away from investing. A whopping 89% of 25- to 35 year-old heads of household surveyed by the Federal Reserve in 2016 said their families were not invested in stocks. That’s only two percentage points higher than the average response since the Fed began the survey in 1989.

MagnifyMoney analyzed data from the 2016 Survey of Consumer Finances, conducted by the the Federal Reserve, to determine exactly how older millennials — those aged 25 to 35 — are allocating their assets.

In 2016, wealthy millennial households, on average, owned assets totaling more than $1.5 million. That is nearly nine times the assets of the average family in the same age group — $176,400. Included were financial assets (cash, retirement accounts, stocks, bonds, checking and savings deposits), as well as nonfinancial ones (real estate, businesses and cars).

While the wealth of each group was spread across just about every type of asset, the biggest difference was in the proportions for each category.

To add an extra layer of insight, we compared the savings habits of the average millennial household to millennial households in the top 25% of net worth. We also took a look at how the average young adult manages his or her assets to see how they differ in their approach.

Millennials and the stock market

Despite significant differences in income, we found that both sets of older millennial households today (average earners and the top 25% of earners) are investing roughly the same share of their financial assets in the market – about 60%.

Among the top 25% of millennial households, those with brokerage accounts hold more than 37% of their liquid assets, or about $224,000, in stocks and bonds and an additional 26%, or $154,000, in retirement accounts. Meanwhile, just over 14% of their assets are in liquid savings or checking accounts.

By comparison, the average millennial household with a brokerage account invests a little over $10,000 in stocks and bonds, or 22% of their total assets, and they reserve about 21% of their assets in checking or savings accounts.

Millennial households invest most heavily in their retirement accounts, accounting for around 38% of their financial assets, although they have only saved $18,800 on average.

Wealthy millennials carry much less of their wealth in checking and savings, compared with their peers. Although wealthier families carry eight times more in savings and checking than the average family — $84,000 vs. $10,300 — that’s just roughly 14% of their total assets in cash, while for the ordinary young family that figure is around 20%

The Fed data show that those on the top of the earnings pyramid are able to save far more for the future, even though they’re at a relatively early stage of their careers.

Across the board, older millennial families hold the greatest share of their financial assets in their retirement accounts. Although that share of retirement savings is smaller for wealthier millennial families (26% of their financial assets, versus 38% for the average older millennial family), they have saved far more.

When looking at the median amount of retirement savings versus the average, a more disturbing picture emerges, showing just how little the average older millennial family is saving for eventual retirement.

The median amount of money in higher earners’ retirement account is $90,000 (median being the middle point of a number set, with half the available figures above it and half below). But the median amount is $0 for the typical millennial family, meaning that at least half of millennial-run households don’t have any retirement savings at all.

Millennials and their nonfinancial assets

Most of millennial households’ wealth comes from physical assets, such as houses, cars and businesses.

While nearly 60% of young families don’t own houses today, the lowest homeownership rate since 1989, homes make up the largest share of the family’s nonfinancial assets, Fed data show.

For the average-earning older millennial family, housing represents more than two-thirds of the value of its nonfinancial assets — 66.4%. On average, this group’s homes are valued at $84,000.

The homes of rich millennial households are worth 4.6 times more, averaging $470,000 — though they represents a lower share of total nonfinancial assets — 50%.

Cars are the second-largest hard asset for the average young family to own, accounting for about 14% of nonfinancial assets.

While rich millennials drive fancier cars than their peers — prices are 2.4 times that of average millennials’ cars — their $42,000 car accounts for just 4.5% of their nonfinancial asset. In contrast, they stash as much as 31% of their asset in businesses, 20 percentage points higher than the ordinary millennial.

It’s worth noting that young adults in general are not into businesses. A scant 6.3% of young families have businesses, the lowest percentage since 1989, according to the Fed data. (Among those that do have them, the businesses represent just over 11% of their total nonfinancial assets.)

The student debt gap

Possibly the starkest example of how wealthy older millennials and their ordinary peers manage their finances can be seen in the realm of student loan debt.

A significant chunk of the average worker’s household debt comes in the form of student loans, making up close to 20% of total debt and averaging $16,000. In contrast, the wealthiest cohort carries about $2,000 less in student loan debt, on average, and this constitutes just about 4.6% of total debt.

With less student debt to worry about, it’s no surprise wealthier millennial families carry a larger share of mortgage debt. About 76% of their debt comes from their primary home, to the tune of $233,500, on average. This is 4.5 times the housing debt of a typical young homeowner.

In some cases, the top wealthy have another 11% or so of their total debt committed to a second house, something not many of their less-wealthy peers would have to worry about — affording even a first home is more of a struggle.

When is the right time to start investing?

For many millennials the answer isn’t whether or not it’s wise to save for retirement or invest for wealth but when to start. Generally, paying off high interest debts and building up a sufficient emergency fund should come first. Once those boxes are ticked, how much young workers invest depends on their tolerance for risk and their future financial goals.

“It’s never too much as long as you’ve got money for the emergency fund, and as long as they are funding their other goals not through debt,” says Krista Cavalieri, owner and senior advisor at Evolve Capital in Columbus, Ohio.

The biggest mistake that Cavalieri has seen among her young clients is that very few have been able to establish an emergency fund that will cover at least three to six months’ worth of living expenses.

Kelly Metzler, senior financial advisor at the New York-based Altfest Personal Wealth Management, said older millennials may not be able to save outside of retirement accounts yet, which can be a concern if they want to buy a house or have other large purchases or unexpected expenses ahead.

Cavalieri said that’s because young adults’ money is stretched thin by the varies needs in their lives and the lifestyle they keep.

“Their hands are kind of tied at where they are right now,” she said. “Everyone could clearly save more, but millennials are dealing with large amounts of debt. A lot of them are also dealing with the fact that the lack of financial education put that in that personal debt situation.”

The post Where the Wealthiest Millennials Stash Their Money appeared first on MagnifyMoney.

The Millennial Mortgage Problem: Down Payments and Expensive Cities

Here's how to find money for a down payment.

If you’re a millennial who’d like to buy a house before Beyoncé’s twins graduate from high school, then listen up.

The folks at Apartment List recently crunched the numbers surrounding our chances at homeownership, and they’re pretty stark. At the rate we’re going, Rumi and Sir are going to be in Freshman Comp before we get the keys to our own pads.

Why Millennials Are Waiting to Buy Homes

For its report, Apartment List surveyed 24,000 renters across the country.

Contrary to popular opinion, which says millennials are city-worshipping vagrants, 80% of respondents said they plan to buy a house or apartment. (I guess those fourth-floor walk-ups aren’t always as dreamy as they seem.)

But 36% said they plan to wait five years or more before making that purchase—a sharp increase from the 23% who had the same response in 2014.

Why? Of the reasons offered (respondents could choose more than one), here were the most popular:

  • Affordability: 72%
  • Not ready to settle down: 45%
  • Waiting for marriage: 36%

“Despite recent improvements in the labor market, millennials face a severe shortage of affordable entry-level homes in many parts of the country,” wrote the study’s authors. “This leaves millennials with difficult choices: extend their budgets and purchase at higher debt-to-income ratios, heightening the risk of mortgage default; migrate to more affordable areas; or delay buying a home altogether.”

The authors also pointed to student debt, lack of savings, and stagnant career opportunities as reasons millennials can’t afford homes.

How Long Millennials Would Have to Wait in 31 Popular Cities

After drilling into that affordability metric further, the study found that 53% of millennials cited down payments as the biggest obstacle they face in buying a home.

In fact, 68% said they’d saved less than $1,000 for a down payment—and 44% hadn’t saved anything.

One reason they might not be saving more is that they don’t realize how much they need for a down payment. In Los Angeles, the city with the biggest gap between expectations and reality, millennials underestimated the amount they’d need for a down payment by a whopping 43%.

And when it comes to the reality of home mortgages, most millennials probably aren’t going to like what they see. Apartment List determined how long it would take the average respondent to save for a 20% down payment based on how much they’ve already saved, how much help they anticipate receiving, and how much they’re saving each month. Based on those factors, Apartment List says it will take millennials between five and twenty-three years to save up enough money to afford a condo in thirty-one popular cities.

The calculations even account for increases in wages and home prices as well as returns on investment (although we doubt many people are saving for their down payment in the stock market).

Picture1

How outrageous is that?

At this rate, millennials in sixteen cities will have to wait more than a decade before they can afford a down payment—and in three cities, they’ll have to wait more than twenty years!

How to Save for a Down Payment

If you’d like to purchase a home sooner than that, the answer is simple: you have to save more.

Only 29% of the millennials surveyed are saving at least $200 each month—and as the numbers show, that’s not going to cut it.

Although you can hope the housing market becomes more affordable, you have much more control over your own financial situation.

Here are three ways to put a home in closer reach.

1. Automate Your Savings

The best way to divert money from your Starbucks addiction to your house fund is to automate the process.

To keep it simple, set up an automatic withdrawal from your checking account to your savings account. If you’re not saving anything yet, try $100 per week to start. Then, once that feels normal, increase it to $150 per week, and so on.

You probably won’t even miss it.

2. Work a Side Hustle

Thanks to the gig economy, it’s easier than ever to earn extra dough. And it’s much easier to work nights and weekends when you have a clear goal in mind—in this case, your future house.

Start a freelance writing business or drive for Uber. Whatever it is, funnel all your earnings into a special savings account that’s dedicated to your down payment.

3. Look into First-Time Homebuyer Programs

Does 20% seem totally out of reach? It might be time to look into programs for first-time homebuyers. Here are two you might not have considered.

  • FHA loans: With the backing of the Federal Housing Authority, first-time homebuyers with credit scores of 580 or above might be able to put as little as 3.5% down. For buyers with credit scores from 500 to 579, that number jumps to 10%.
  • USDA loans: If you’re buying a home in a rural area and meet credit and income requirements, you could purchase a home with no down payment through USDA loans.

You also could look into first-time homebuyer grants, which can significantly reduce the cost of a house.

One of the biggest national programs (besides VA loans for veterans) is Good Neighbor Next Door from the Department of Housing and Urban Development. With this grant, law enforcement officers, emergency medical technicians, firefighters, and teachers in “revitalization areas” can receive up to 50% off the list price of a home.

Otherwise, most grants are administered at the state or local level. To see what’s available in your area, search for “down payment assistance” or “first-time homebuyer grants” in your state. A good mortgage broker also should be able to point you in the right direction.

If being a homeowner is your dream, you shouldn’t let anything stand in your way.

Let these numbers spur you into action—and into saving! Visit Credit.com’s Mortgage Learning Center for more information on how to plan for your mortgage and your future home.

Image: monkeybusinessimages

The post The Millennial Mortgage Problem: Down Payments and Expensive Cities appeared first on Credit.com.

The Millennial Mortgage Problem: Down Payments and Expensive Cities

Here's how to find money for a down payment.

If you’re a millennial who’d like to buy a house before Beyoncé’s twins graduate from high school, then listen up.

The folks at Apartment List recently crunched the numbers surrounding our chances at homeownership, and they’re pretty stark. At the rate we’re going, Rumi and Sir are going to be in Freshman Comp before we get the keys to our own pads.

Why Millennials Are Waiting to Buy Homes

For its report, Apartment List surveyed 24,000 renters across the country.

Contrary to popular opinion, which says millennials are city-worshipping vagrants, 80% of respondents said they plan to buy a house or apartment. (I guess those fourth-floor walk-ups aren’t always as dreamy as they seem.)

But 36% said they plan to wait five years or more before making that purchase—a sharp increase from the 23% who had the same response in 2014.

Why? Of the reasons offered (respondents could choose more than one), here were the most popular:

  • Affordability: 72%
  • Not ready to settle down: 45%
  • Waiting for marriage: 36%

“Despite recent improvements in the labor market, millennials face a severe shortage of affordable entry-level homes in many parts of the country,” wrote the study’s authors. “This leaves millennials with difficult choices: extend their budgets and purchase at higher debt-to-income ratios, heightening the risk of mortgage default; migrate to more affordable areas; or delay buying a home altogether.”

The authors also pointed to student debt, lack of savings, and stagnant career opportunities as reasons millennials can’t afford homes.

How Long Millennials Would Have to Wait in 31 Popular Cities

After drilling into that affordability metric further, the study found that 53% of millennials cited down payments as the biggest obstacle they face in buying a home.

In fact, 68% said they’d saved less than $1,000 for a down payment—and 44% hadn’t saved anything.

One reason they might not be saving more is that they don’t realize how much they need for a down payment. In Los Angeles, the city with the biggest gap between expectations and reality, millennials underestimated the amount they’d need for a down payment by a whopping 43%.

And when it comes to the reality of home mortgages, most millennials probably aren’t going to like what they see. Apartment List determined how long it would take the average respondent to save for a 20% down payment based on how much they’ve already saved, how much help they anticipate receiving, and how much they’re saving each month. Based on those factors, Apartment List says it will take millennials between five and twenty-three years to save up enough money to afford a condo in thirty-one popular cities.

The calculations even account for increases in wages and home prices as well as returns on investment (although we doubt many people are saving for their down payment in the stock market).

Picture1

How outrageous is that?

At this rate, millennials in sixteen cities will have to wait more than a decade before they can afford a down payment—and in three cities, they’ll have to wait more than twenty years!

How to Save for a Down Payment

If you’d like to purchase a home sooner than that, the answer is simple: you have to save more.

Only 29% of the millennials surveyed are saving at least $200 each month—and as the numbers show, that’s not going to cut it.

Although you can hope the housing market becomes more affordable, you have much more control over your own financial situation.

Here are three ways to put a home in closer reach.

1. Automate Your Savings

The best way to divert money from your Starbucks addiction to your house fund is to automate the process.

To keep it simple, set up an automatic withdrawal from your checking account to your savings account. If you’re not saving anything yet, try $100 per week to start. Then, once that feels normal, increase it to $150 per week, and so on.

You probably won’t even miss it.

2. Work a Side Hustle

Thanks to the gig economy, it’s easier than ever to earn extra dough. And it’s much easier to work nights and weekends when you have a clear goal in mind—in this case, your future house.

Start a freelance writing business or drive for Uber. Whatever it is, funnel all your earnings into a special savings account that’s dedicated to your down payment.

3. Look into First-Time Homebuyer Programs

Does 20% seem totally out of reach? It might be time to look into programs for first-time homebuyers. Here are two you might not have considered.

  • FHA loans: With the backing of the Federal Housing Authority, first-time homebuyers with credit scores of 580 or above might be able to put as little as 3.5% down. For buyers with credit scores from 500 to 579, that number jumps to 10%.
  • USDA loans: If you’re buying a home in a rural area and meet credit and income requirements, you could purchase a home with no down payment through USDA loans.

You also could look into first-time homebuyer grants, which can significantly reduce the cost of a house.

One of the biggest national programs (besides VA loans for veterans) is Good Neighbor Next Door from the Department of Housing and Urban Development. With this grant, law enforcement officers, emergency medical technicians, firefighters, and teachers in “revitalization areas” can receive up to 50% off the list price of a home.

Otherwise, most grants are administered at the state or local level. To see what’s available in your area, search for “down payment assistance” or “first-time homebuyer grants” in your state. A good mortgage broker also should be able to point you in the right direction.

If being a homeowner is your dream, you shouldn’t let anything stand in your way.

Let these numbers spur you into action—and into saving! Visit Credit.com’s Mortgage Learning Center for more information on how to plan for your mortgage and your future home.

Image: monkeybusinessimages

The post The Millennial Mortgage Problem: Down Payments and Expensive Cities appeared first on Credit.com.

10 Cities Where Millennials Are Buying Homes (& 10 Where They Aren’t)

Millennials are increasingly becoming homeowners, but in some cities more than others.

With staggering student loans, fewer affordable starter homes and lower earnings than the previous generation, young adults own fewer homes than ever. Considering the reputation millennials have in the media for poor financial skills — avocado toast, anyone? — it’s no surprise the millennial generation is very slowly entering the home buying market. Although millennials are the largest generation of adults, they only account for 7.5% of the value of all U.S. homes.

ABODO, an apartment listing company, analyzed the 100 largest metropolitan statistical areas by population from the U.S. Census Bureau 2015 American Community Survey to find the highest and lowest percentage of all millennial householders who are owners.

Home buying among adults ages 18 to 35 has slowed. In 2005, 39.5% of this age group owned homes. That share fell to 32.1% in 2015. (Remember, when buying a home, your credit plays a major part. Before stepping into the home buying market, it’s a good idea to check your credit. You can see a free snapshot of your credit reports on Credit.com.)

This trend might reverse. Recently, more millennials have been entering the home-buying market. Only time will tell if this trend will stick, but for now, here are the 10 cities millennials are buying homes — and the 10 where they aren’t.

Cities Where Millennials Are Buying Homes

10. St. Louis, Missouri-Illinois
Millennial Home Ownership: 40.2%

9. Detroit-Warren-Dearborn, Michigan
Millennial Home Ownership: 40.2%

8. Boise City, Idaho
Millennial Home Ownership: 40.6%

7. Baton Rouge, Louisiana
Millennial Home Ownership: 41.0%

6. Scranton-Wilkes-Barre-Hazleton, Pennsylvania
Millennial Home Ownership: 41.9%

5. Minneapolis-St. Paul-Bloomington, Minnesota-Wisconsin
Millennial Home Ownership: 42.4%

4. McAllen-Edinburg-Mission, Texas
Millennial Home Ownership: 43.3%

3. Des Moines-West Des Moines, Iowa
Millennial Home Ownership: 43.6%

2. Grand Rapids-Wyoming, Michigan
Millennial Home Ownership: 45.3%

1. Ogden-Clearfield, Utah
Millennial Home Ownership: 51.0%

Cities Where Millennials Aren’t Buying Homes

10. Durham-Chapel Hill, North Carolina
Millennial Home Ownership: 25.2%

9. Madison, Wisconsin
Millennial Home Ownership: 24.7%

8. New Haven-Milford, Connecticut
Millennial Home Ownership: 24.4%

7. Fresno, California
Millennial Home Ownership: 23.6%

6. San Francisco-Oakland-Hayward, California
Millennial Home Ownership: 20.5%

5. San Jose-Sunnyvale-Santa Clara, California
Millennial Home Ownership: 20.2%

4. New York-Newark-Jersey City, New York-New Jersey-Pennsylvania
Millennial Home Ownership: 19.8%

3. San Diego-Carlsbad, California
Millennial Home Ownership: 19.8%

2. Urban Honolulu, Hawaii
Millennial Home Ownership: 18.3%

1. Los Angeles-Long Beach-Anaheim, California
Millennial Home Ownership: 17.8%

Image: Bauhaus1000

The post 10 Cities Where Millennials Are Buying Homes (& 10 Where They Aren’t) appeared first on Credit.com.

9 Things Every 20-Something Should Know About Money

If you’re a “younger” millennial and find yourself struggling with your finances in your 20s, pay attention.

There’s no better time to learn about money than when you’re young and broke. The 10 years between 20 and 30 go by fast, and will be full of many important life changes that can shape your overall financial future. Whether it’s financial planning, saving, or investing, the sooner you start, the better off you’ll be.

If you can educate yourself on how to manage the little money you have now, you’ll be better prepared to manage your finances effectively when you earn more and life inevitably gets more complicated.

Lucky for you, today’s technology provides you with a wealth of (free) financial information at your fingertips, including this handy list of expert-approved money lessons to learn on your journey to dirty 30.

9 Things You Should Learn about Money in your 20s

#1: The magic of spending less than you earn

The first financial lesson you should learn is simple enough: spend less than you earn. Most people mess this one up.

At least, Pew Research shows 68% of Americans say they use credit cards and loans to make purchases that they otherwise wouldn’t be able to afford with their income and savings. This leads to more stress in your life, a dependency on debt, and an endless cycle of working to pay off or evade lenders.

Learn to follow a budget well and you’ll easily learn to live within your means. You may even take it a step further in your 20s — save more by living below your means, not just within your paycheck.

“Gain peace of mind that you’re being responsible by setting up guidelines for your spending and savings early in your 20s,” says Dan Andrews, certified financial planner and founder of Well-Rounded Success. The website provides financial guidance geared toward a millennial audience.

If you get those guidelines set early in your life, you’ll likely have an easier time addressing more complicated money topics like homeownership and having kids. If not, a large unexpected bill or the birth of a child could destroy your finances.

#2: Eventually something will go wrong

In the savings hierarchy, your emergency fund should be your first priority.You are bound to run into an emergency eventually.

“I know when you’re a 20-something, you feel invincible, but the fact is, emergencies are still going to arise, it’s not a matter of if, but when,” says Gen Y financial expert and author of The Broke and Beautiful Life Stefanie O’Connell.

The rule of thumb says to set aside 6 to 12 months’ worth of fixed expenses in case of an emergency. You can stash this money in a checking account, savings account, or any of these other options.

If you don’t plan for a financial emergency, you’ll find yourself in a tight spot when an emergency undoubtedly happens. If, for example, you lose your income, a liquid savings buffer might save you from turning to your parents for money or taking on high-interest debt to survive. That’s not an improbable crisis to imagine, as almost half of American households experience volatile income.

“By setting aside money, you can live off this savings while you look for new work, or better yet, have the flexibility to pursue the work you want,” says Andrews.

After the dust settles, you can high-five yourself for handling your crisis on your own.

#3: “YOLO” is a pretty terrible financial strategy

One of the hardest parts of your 20s is learning to think past “today” when making money decisions — especially when everyone seems to want to live in the moment.

Really ask yourself what goals you have for the future: Starting your own business? A family? Now is the time to stop thinking and start planning for how you’ll afford those life milestones when the time arrives.

Make it a habit to plan and save early for these stages before you reach them. When you’re planning, think about what’s most important to you and nearest in your life’s timeline. Don’t forget to consider the time it would take to save for larger expenses.

O’Connell gives the following example: If you decide to start saving for a $50,000 home down payment just two years before you plan to buy a home, you’ll have to save $25,000 a year. That’s tough. But if you think about that milestone money goal from 10 years out, you only have to save $5,000 a year, which is much more manageable.

Not every account has to be for a huge savings goal like a mortgage payment. You can practice the habit of planning ahead with any large purchase you plan to make.

“Create fun savings accounts, like a travel fund or to save up for that Dr. Seuss painting that you really want. These savings accounts motivate you to stash away more money for the financial milestones in your future,” says Andrews.

#4: The key to getting a killer credit score

Don’t get bogged down trying to understand everything about your credit score and why it’s so important right now. Just remember a few key facts so that you don’t mess up your score early and spend the next decade trying to undo the damage.

  • Use your credit card, but pay it off in full each month.
  • Don’t max it out. In fact, never use more than 30% of your total available limit.
  • The best strategy: Put one small bill or recurring purchase (like coffee) on your credit card, and pay it off each month. Use cash for everything else.

If you focus on those things, you should easily avoid derogatory marks on your credit report and quickly build a healthy credit score. Learn more tips to build your credit score here.

#5: One day you will get old and want to retire

Remember how we said it’s hard to think far into the future in your 20s? Well, this is going to be challenging. But it’s crucial to start saving for retirement as early as possible. Your biggest advantage to saving for retirement is your age. The younger you are, the more time you have to take advantage of compound interest on your retirement savings and other investment accounts.

So figure out what retirement savings options your employer offers (typically a 401(k)) and open an account. If your employer offers a match, then that is amazing and don’t miss out — it’s free money.

Contact your employer’s human resources department for help working through your options. That is what they are there for. A great, hands-off option for young savers is a Target Date Fund. Then set up an automatic payroll deposit at least high enough to capture any match your job offers.

Don’t worry about the swings of the stock market. Don’t worry about picking the perfect portfolio. Just put money in your retirement fund as early as possible and get to the complicated stuff later. The point is that you start saving for retirement — not that you become the next Warren Buffett right away.

“Too many young people don’t take advantage of all the benefits they can get at their workplaces. Simply ask your HR department if there’s a match on 401(k) contributions,” says Andrews.

Once you get a good grasp on retirement savings, you can upgrade to more sophisticated investing strategies.

#6: How to be your own “tax guy”

Do your own taxes at least once. The experience will give you a better idea of how the tax system works and can save you an average $273 you’d otherwise spend on tax preparation fees. Many free and low-cost options exist to e-file your taxes, including free filing options found on the IRS website.

“When you do your own taxes it also helps to demystify the process. If you decide to pay for help in the future, you’ll be able to vet your future accountant and hold your own in conversations,” says O’Connell.

She advises young people to take the opportunity to learn about how the tax system works and any tax strategies you can use to save money in the future, like making Roth IRA contributions, tuition payments, or charitable donations.

Another reason to learn now: Your taxes may never be simpler to understand. There may be special circumstances that require you to hire a tax professional when you’re older, like getting married, investing in the stock market, or owning your own business. If you feel like you need professional help, look for a tax preparer since their rates are typically cheaper than hiring a Certified Public Accountant.

#7: When to ignore social media


Don’t get caught up in spending your money to catch up with whatever your other friends are doing. You don’t know what anyone’s financial picture looks like behind all those Instagrammed vacations or a wedding album fit for a princess.

“Your day will come when you make your friends jealous, but that’s not the point. The point is to focus on your financial life to give you the foundation to live your great life,” says Andrews.

He advises 20-somethings to gain resilience while young, because you’ll likely compare your lifestyle to others at every age.

#8: Your debt won’t go away if you ignore it

If you do decide to ignore your debts, you could suffer consequences even worse than a dinged credit score.

Debt collectors can sue you for payment. If you ignore a debt lawsuit, the resulting judgment could result in garnished wages or lost assets.

“You’ve got to become proactive about your debt. It has to go from being something you procrastinate to something you prioritize. And a priority is something you build your life around,” says O’Connell.

O’Connell suggests you change your mindset to think of debt as an emergency that needs to be addressed immediately.

“In moments of crisis we don’t make excuses, we get ruthless because we have to. Excuses like, ‘but it’s a special occasion’ or ‘I can’t give up my vacation’ don’t even cross our minds,” says O’Connell. She adds getting ruthless might mean making some sacrifices and hustling to earn more income, but it’ll be worth it when you’re debt-free.

Struggling to make your student loan payments? You’ve still got options.

#9: How and when to negotiate your salary

Remember, the salary you earn at your first real-world job “will serve as the anchor from which you negotiate future raises, making your starting salary, arguably, the most important of your career,” says O’Connell.

That in mind, it’s worth negotiating a bit to get the best deal you can when you’re presented with your first employment offer. Hiring managers and recruiters expect candidates to negotiate; to them, it demonstrates initiative. The experience will also give you an opportunity to educate yourself about negotiation skills and get valuable, real-world practice.

Again, the internet is your friend here. You can learn salary negotiation tactics from numerous online resources, then practice with friends or mentors so you’re ready when a real offer is on the table. One word of warning: Don’t bite off more than you can chew. Remember, you can ask for much more than more money (think: commuter benefits, education credit, etc.).

If you’re asking for a raise with a current employer, consider the average pay raise for salaried employees in 2017 is 3%, according to the Economic Research Institute, a think tank that provides salary survey data to Fortune 500 companies. So asking for a salary hike from $50,000 to $60,000 is pushing it at a 20% pay raise without much experience to justify your ask.

To sum it all up…

Just do your best. Focus on learning these concepts, but don’t beat yourself up. If you stray from your path to financial freedom every now and then, it’s all right. You can’t expect to be a perfect money manager — even accountants have accountants — but if you correct yourself when you make mistakes early on, you’ll be glad you made the effort later on in life.

The post 9 Things Every 20-Something Should Know About Money appeared first on MagnifyMoney.

How to Make Moving Back Home Work for You

Moving back home doesn't have to be the end of the world. Here are tips for surviving and getting out.

I’ve moved back home with my parents twice: Once after college to work at a nearby internship and again after breaking up with the person I was living with.

My parents were, at least outwardly, cool about it both times. They never charged rent, which probably made me feel more guilty about mooching off them and spurred me to move out faster.

More than half of post-college millennials moved back in with their parents after college, according to a recent survey by TD Ameritrade. Not all of them have parents as cool as mine, and the mix of emotions involved with shacking up in your childhood bedroom can lead to tension. So if that’s where you find yourself, here are a few tips for making it work.

How to Prepare

Before you plan to move home, you should have a plan to leave, said Susan Newman, a psychologist and author of “Under One Roof Again: All Grown Up and (Re)learning to Live Together Happily.” Know how you will eventually move out and discuss a possible move-out date with your parents.

“It helps you focus a little more on your job hunt,” she said.

If you don’t have a job yet, don’t stress. Here are 50 things you can do to score your first job.

If the date passes, you can always reassess.

You should also talk about your schedule. When you were in high school, your parents might have expected you for dinner every night. Now that you’re an adult, if that’s not the case, you should have a conversation to reset those expectations so Mom doesn’t get offended when she makes your favorite dish and you’re at the bar.

How to Have a Social Life

While you may want to have friends or dates over whenever you want, you still need to respect your parents’ feelings, Newman said. After all, it’s still their house.

Kate Moore, a 26-year-old content creator with Precision Marketing Group, has lived at home for about two months. She said it’s best to establish boundaries on day one.

“You’re used to gallivanting around town at all hours of the night and returning when you felt like it,” Moore said. “Now that you’re back under your parents’ roof, you need to maintain a delicate balance between respecting their space and maintaining your freedom.”

If you expect to be able to come and go as you please, make that clear, but also promise to be considerate.

How to Avoid Clashes

If you had tension with your parents before you moved out, don’t expect that to go away this time around. Make sure to address it head-on once you move back in, Newman said.

For example, if talking about politics always leads to an argument at the dinner table, Newman suggests making clear that is an off-limits topic for both of you. If your parents have disagreed with you on certain issues your whole life, like your style, friends or politics, come to an agreement that you won’t let those issues come to a boil.

Some parents simply won’t listen. It can be hard for the people who taught you how use the toilet to treat you like a fellow adult.

“One thing that might help a lot of the time is to say to your parents, ‘Wait a minute, I’m not the little kid I was before and I really don’t like being treated like a teen who just got my driver’s license,'” Newman said.

However, that also means acting like an adult. Clean up after yourself and don’t expect your parents to do everything for you.

How to Avoid Feeling Like a Mooch

Moore said her parents charge her only as much rent as their utilities increased from her living with them. She said other people moving home should work out how they could contribute to the costs in bills and food they’re accumulating for their parents. Little gestures help, too.

“Sometimes I delight my parents by bringing home a case of paper towels or a gallon of 2% milk,” Moore said. “Small contributions to the greater household will go a long way.”

Don’t act like a guest, Newman said. If you don’t have a job, find other ways to help, like making dinner or mowing the lawn. Yard work for neighbors might also be a good way to earn some extra money.

How to Benefit

You’re not just getting free meals and discounted rent, Newman said, but a chance to spend time with your parents while you’re adult instead of a child they’re raising. Young people should take advantage of the opportunity to get to know their parents, in addition to paying off their student loans or building up their savings. (See how to lower your student loan payments here.)

“As a young adult, and as a parent who’s not racing off to the soccer field for the third game of the weekend, you have more time to talk,” Newman said.

How to Get Out

Whatever your reason for moving back home, whether it’s to chip away at student loan debt or to find a job, pay off credit card debt or simply to save money, it’s important to know what your monetary target is and make a plan for getting there.

Even if you don’t reach your goal by the the time you agree to move out, whether it’s six months or a year, your parents won’t necessarily kick you out if you’ve shown progress, Newman said.

Moore said a mix of rent prices in the area, student loan debt and credit card debt led her back home. Since moving, she’s paid off one of her credit cards. (Paying off a credit card means you’ll lower your credit utilization, and ultimately improve your credit scores. Having good credit scores can help you land better terms and conditions on things like an auto loan or mortgage. Want to see how your credit card debt is affecting you? Check out a free snapshot of your credit report on Credit.com.)

Young adults moving back home shouldn’t feel like they’ve failed, neither should parents whose kids haven’t quite left the nest, Newman said.

“You don’t have to feel guilty,” she said. A lot of young adults lean on their parents to some degree, even if they don’t move back home.

“My son still brings home his laundry,” she said.

Image: monkeybusinessimages

The post How to Make Moving Back Home Work for You appeared first on Credit.com.

How Millennial Parents Can Improve Their Life Insurance

Life insurance startup Haven Life recently conducted a survey to see what millennial parents value most in terms of finances. Not on their agenda: life insurance.

With about 9,000 millennials becoming parents every day, it’s fair to ask, How are they doing so far? Life insurance startup Haven Life recently conducted a survey of parents with children ages 0 to 5 to better understand what this new generation prioritizes when it comes to raising their kids. (Full Disclosure: I’m the marketing and communications director for Haven Life.)

The findings paint a fascinating picture of parents who are invested in raising smart, compassionate children, but who are financially unprepared for their family’s future. We’ll look at three areas with room for improvement.

1. Saving for College

According to the study, only 13% of millennial parents identified college savings as one of their top child-related financial priorities. Maybe it’s because college seems so far off for their young children. Still, tax-saving programs can (and should) be taken advantage of now. Even an early, small contribution has the ability to compound and grow over time.

“By making college savings such a low priority, parents are missing out on the benefits of compounding investment returns from tax-advantaged programs like 529 Plans or even minimally aggressive investment accounts,” said Bobbi Rebell, author of How to Be a Financial Grownup. “That is more money potentially left on the table that isn’t being tapped.”

With the average total cost of a four-year public university degree expected to balloon to more than $205,000 by the year 2030, parents need as much time as possible to save if they plan to cover this expense.

2. Saving for Emergencies

Unforeseen expenses like car maintenance, home repairs or medical emergencies can be costly. If you’re not financially prepared, the effects can result in high-interest debt. (You can see how your debt is affecting your credit by viewing two of your scores for free on Credit.com.)

About 53% of millennial parents have $5,000 or less in savings, and 34% have $1,000 or less. According to AAA, the average car repair bill is between $500 and $600, so a high-end repair could deplete a savings account almost instantly.

One of the best ways to avoid this is by having a nest egg that serves as a backup plan for the unexpected. Most experts recommend building an emergency fund that can cover at least six months worth of expenses, and possibly more if you have several children. Budgeting services like Mint and You Need a Budget can help identify opportunities to free up more cash for emergency savings.

3. Life Insurance

If the risk of a sudden and significant emergency isn’t scary enough, consider this: Few emergencies are costlier or more unpredictable than death. A recent Parting.com article indicated that a funeral and related burial services for the average family can cost between $8,000 and $10,000. And that’s on top of the mortgage, child care, debt repayments and other expenses survivors might have to pay.

Haven Life’s study found that just 15% of millennial parents consider life insurance a financial priority. Of those who have life insurance, 70% have less than $250,000 in life insurance, and 20% have none at all. With an average household income of about $81,000, the majority of millennial parents surveyed were underinsured.

Life insurance needs vary from family to family, but typically experts recommend coverage that’s at least five to 10 times your annual salary. An online life insurance calculator can help you determine what the right amount of coverage looks like for your family.

Stay-at-home parents should consider obtaining life insurance as well. While they don’t technically take home a salary, it’s estimated that the work they do accomplish can equate to an annual salary of $113,000.

If providing a comfortable upbringing is a primary concern, a life insurance policy is virtually a necessity to help protect loved ones. The proceeds of a life insurance policy can help your spouse or the guardian of your children cover day-to-day bills, future schooling expenses, child care, debts you leave behind and more. (You can learn how much debt is too much by going here.)

Millennial Parents Have Good Intentions but Need Financial Discipline

Haven Life’s survey shows millennial parents have good intentions when it comes to raising their children. They dedicate the majority of their time and resources to raising kind, well-rounded little ones.

College savings, emergency savings and life insurance coverage are three important components of a financial plan that helps provide stability in children’s lives. Without improvement in those areas, parents risk falling short on what most consider to be the ultimate goal: to provide their children with more — more education, more money, more love and more time.

Image: Lacheev

The post How Millennial Parents Can Improve Their Life Insurance appeared first on Credit.com.

30 Cities Where Millennials Are Still Living With Their Parents

Across the country, more people ages 18 to 34 are living at home with their parents. Here are the cities where it's happening the most.

Image: monkeybusinessimages

The post 30 Cities Where Millennials Are Still Living With Their Parents appeared first on Credit.com.

Millennials: Will Work for Travel

millennials_work_to_travel

It’s better to work to live, rather than live to work. Millennials are taking that sage advice one step farther, according to a new poll: They work to travel.

The ability to travel is nearly as essential a work motivator as food and shelter, millennials told surveyors recently. It’s a result that employers should consider carefully.

In the same online poll, conducted by job search site FlexJobs.com, young workers said they would take steep pay cuts — as high as 20% — in exchange for more flexibility at work. And nearly two-thirds said they’d be more productive working at home than at the office.

Meanwhile, 34% said they’d left a job because it didn’t provide enough flexibility. And another 24% said they are currently looking for a new job with more flexibility.

“Since millennials are now the largest generation in the U.S. labor workforce, it’s critical that companies pay attention to how, where and when they work best,” said Sara Sutton Fell, founder and CEO of FlexJobs.

Fully 70% of millennials identified the desire to travel as a primary reason to work, second only to paying for basic necessities (88%), FlexJobs said.

Only 47% of Baby Boomers said travel was a primary reason for work.

Other less-cited reasons that millennials work:

  • Passionate about success in my field (60%);
  • To have a professional impact on the world (49%);
  • To pay for continuing education (36%);
  • To pay for child-related costs (29%) or support their parents (21%).

The FlexJobs online poll was self-selected, and included about 3,000 responses: Millennials (678 respondents), Gen Xers (1,358 respondents), and Boomers (845 respondents).

The Boston Consulting Group says that millennials have particular travel habits, too. They want to see the world, clearly. In a survey, far more millennials than non-millennials told BCG they want to visit every continent (70% versus 48%) and to travel abroad as much as possible (75% vs. 52%).

Traveling More, Longer & Smarter

Because millennials are marrying older, they tend to take trips in groups with friends. They also book further in advance, book fewer (but longer) trips, and work hard to find good deals, BCG said.

“(They) tend to see booking as more of a game and respond opportunistically to low prices and interesting packages,” BCG wrote in a recent report.

It makes sense that younger workers with less income would be more deal sensitive … and more inclined to hop on a deeply-discounted, last-minute, four-day Europe trip. It then follows that young workers want the ability to make sudden requests for four-day weekends.

That’s partly why, in the FlexJobs survey, work flexibility was cited by 82% of millennials as important when evaluating a job prospect, well above factors like as health insurance (48%), company reputation (45%), and retirement benefits (36%).

It should also be no surprise that millennials are twice as likely as boomers (11% to 6%) to show strong preference for working at a coffee shop or other place outside the office.

Flexibility = Loyalty

“Millennials said they would be more loyal to their employers if they had flexible work options and nearly a quarter would be willing to work more hours,” Sutton Fell said. “So offering millennials work flexibility isn’t just a strategy to avoid negative consequences like losing talent — employers have a lot to gain by modifying their strict, traditional, office-based model of working.”

Remember, if you love to travel, the right credit card can make all the difference. If you’re shopping for a new airline credit card or travel rewards card, it’s a good idea to consider how often you travel and whether you tend to patronize a particular carrier. If you do fly a single carrier, or its partners, that company’s mileage card can be the right choice for you. But if you don’t have a hub in your area or your flights are varied, you might to look into general travel rewards credit cards.

You can also consider maximizing rewards by accumulating airline miles via loyalty programs, and complementing that balance by earning credit card rewards that can be transferred to those airlines.

If you’re in the market for a new credit card, it’s a good idea to check your credit before you apply, as a good credit score can help you qualify for better terms and rates. You can see where you currently stand by viewing two free credit scores, updated every 14 days, on Credit.com.

Image: Jacob Ammentorp Lund

The post Millennials: Will Work for Travel appeared first on Credit.com.

The Average American Has 7.2 Jobs by Age 28

career_skills

Feel like you’re bouncing around between jobs? Have no fear, you are hardly alone. A typical young adult in the U.S. has held an average of 7.2 jobs by age 28, new research shows, which is roughly equivalent to having one new employer each year.

The study, released Friday by the U.S. Bureau of Labor Statistics, examined a nationally representative group of 9,000 young men and women born between 1980 and 1984.

As you’d expect, the job change rates slow as young adults age, but not much: “Individuals held an average of 3.9 jobs in the four-year period from ages 18 to 21. The number of jobs individuals held dropped to 2.7 in the three-year period from ages 22 to 24, and then dropped further to 2.5 in the four-year period from ages 25 to 28,” the report said.

In other words, even into their late 20s, young adults held onto their jobs, on average, for only about 18 months. A “job” in the survey is defined as a period of work with a specific employer; being promoted at the same place of employment would not constitute a new job in this research.

Surprisingly, the rapid rate of job change doesn’t vary much among gender and doesn’t change much among men despite their level of educational attainment. On the other hand, women who spent more time in school changed jobs more frequently.

“Women with a bachelor’s degree held eight jobs from ages 18 through 28, compared with 5.6 jobs for female high school dropouts,” the study found.

People with lower levels of educational attainment see their jobs end quicker. Female high school dropouts held jobs for the shortest duration, with 52% of jobs ending in less than six months, for example.

Job change rate didn’t vary much among race. Hispanic or Latino individuals in the group held 6.5 jobs during the 10-year span while African Americans held 6.8 and whites held 7.5. Education levels didn’t affect whites or Hispanics but did affect African-Americans. Members of that group held only five jobs when failing to earn a high school diploma, but 7.1 when earning a college degree or higher.

Of course, the better question is: Are people job hopping more in today’s economy? Job hopping data isn’t actually that easy to come by. The Bureau of Labor Statistics does not have data on the number of jobs held during an average American’s lifetime, for example, despite persistent conventional wisdom that adults today will undertake multiple careers — up to seven! — before they retire.

However, a similar study released last year offers some helpful context. Baby boomers born between 1957 and 1964 held 11.7 jobs from ages 18 to 48. They also held 5.5 jobs from ages 18 to 24. There was no 18 to 28 calculation, so an apples-to-apples comparison isn’t possible. But data on the boomers suggests millennials aren’t job hopping that much more than their parents.

No matter your demographic, it’s a good idea to check your credit before your start a job search, since some employers pull a version of your credit report as part of the job application process. You can see where your credit currently stands by pulling your credit reports for free each year at AnnualCreditReport.com or viewing your free credit report summary, updated each month, on Credit.com.

More Money-Saving Reads:

Image: Randy Faris/Fuse

The post The Average American Has 7.2 Jobs by Age 28 appeared first on Credit.com.