Instant gratification, credit cards, and I need it now. America's youth are growing up in a culture dominated by these ideas and values. So it's no surprise young adults today are not preparing for their financial futures.
Recently, Stowers Innovations, Inc. conducted an Internet survey of people interested in learning more about financial matters. Less than 10 percent of the 18- to 34-year olds surveyed have a specific plan for retirement at a specific age.
"Young people may think retirement is a long way off. But the truth is, if they don't start saving now, they may not be able to retire at all," said Sam Goller, executive director of Achieve Financial Independence Week (TM) and author of Yes, You Can...Achieve Financial Harmony and Yes, You Can ...Afford to Raise a Family.
"The earlier people begin investing, the greater the likelihood they have of accumulating wealth. Why? It takes significantly less money to accomplish what you want when you have more time working for you."
Retirement isn't the only thing today's young adults are failing to consider. The Stowers Innovations survey found short-term savings are also an issue, with 48 percent of young adults admitting they do not have an emergency fund to cover three-months of living expenses should they face a financial crisis.
"For their own financial security, young adults need to have the mindset that the only person they can count on to take care of them is themselves," said Dr. Sheelagh Manheim, psychologist, co-author of Yes, You Can...Find More Meaning in Your Life and consulting psychologist for Yes, You Can...Raise Financially Aware Kids. "I don't think any adult child willingly wants to live in their parent's basement. But that sometimes happens because some young people fail to plan and think long-term financially."
The following six tips are designed to help young adults analyze their current financial situation, pay off debt, and save for the future.
Don't procrastinate when it comes to saving for retirement; begin now. Take advantage of company sponsored retirement programs such as a 401(k) or Simple IRA. Another option is a Roth IRA. This individual retirement account will allow you to begin saving tax-free, and tax-free withdrawals may be made after age 59 and a half.
Get Rid of Debt:
Today's "buy now, pay later" mentality has forced many Americans into debt. The GoodLife survey found more than 47 percent of adults 18 to 34 had over $8,000 in debt, not including a home mortgage. And 57 percent did not know how long it would take to pay off these debts. Analyze your current debt situation and create a plan that pays off the debt quickly. By paying off debt, you will have more money to save for the future.
Make a Plan and Stick to It:
After analyzing your current financial situation, determine a financial plan that suits you. Once your plan is set, stick to it. Consistency is key. Be sure your plan includes measures to eliminate debt and save for the long- and short-term.
Say No to Credit Cards:
Credit card companies regularly flood college campuses enticing students with free T-shirts and other gifts. While credit cards can be a useful financial tool when used properly, the key is paying them off every month and avoiding interest payments. Say no to credit card spending when you don't have the money to zero-out the balance each month.
Talk with your Parents:
Almost 48 percent of young adults first learned about saving and financial planning from their parents. Ask your parents and find out what has worked for them and what hasn't. Learning from their mistakes can help prevent you from making your own, and learning from their successes can help point you in the right direction financially.
Educate yourself on financial planning. There are many great resources available, including magazines, books, financial planners, and local banks. Surround yourself with as much knowledge as possible so you can make an educated financial plan that will carry you well into the future.
Courtesy of ARA Content© 2006 ARA Content
The views and opinions expressed in these articles do not necessarily reflect those of College Central Network, Inc. or its affiliates. Reference to any company, organization, product, or service does not constitute endorsement by College Central Network, Inc., its affiliates or associated companies. The information provided is not intended to replace the advice or guidance of your legal, financial, or medical professional.