February 22nd, 2021
3 simple ways for millennials to gain more financial peace of mind
According to a recent study by market research firm Mintel, millennials are Britain’s most-indebted generation and the pandemic has only heightened their money troubles.
In recent years, many young people have found themselves squeezed between stagnant wages and rising costs of living. This can make them vulnerable to financial shocks, such as the economic effects of the coronavirus pandemic.
If you want to lessen your vulnerability to shocks, there are a few things that you can do. Read on for three simple ways for millennials to gain more financial peace of mind.
1. Build up an emergency fund
One of the simplest ways that you can gain some peace of mind is to start putting together an emergency fund, so you can absorb economic shocks more easily.
According to a survey by the Yorkshire Building Society, reported by Money Expert, more than a quarter of Brits don’t have enough savings to support themselves for a month if they were to be made redundant. The survey also found that a further 15% have no savings at all.
These are worrying figures given the amount of economic disruption that the pandemic has caused to many people’s lives.
Having an emergency fund at hand can be a great way to build financial stability as it can act as a buffer against short-term disruptions. It can also help you from having to rely on credit if you are unable to work for a period of time.
Typically, most experts recommend that your emergency fund should contain around three to six months’ worth of expenses. This should be enough to give you some peace of mind to know that if disaster should strike, you’ll be able to keep paying your bills until you get back on your feet.
However, you may want to consider keeping a larger fund if you are self-employed or work in a field which is particularly at risk.
It is never too late to start building up an emergency fund to cushion you from financial shocks. A good way to start such a fund is by paying any unexpected money into an easy-access account.
If you are struggling to find enough money to build an emergency fund, you may benefit from seeking financial advice. An adviser can help you to manage your money in a more effective way, enabling you to put aside some money for when you need it.
2. Pay off your debts
As a result of the economic impact of the coronavirus, and the subsequent lockdowns, many Brits have found themselves temporarily unable to work. This has led to many people falling into debt, as they have had to borrow to pay for essentials.
According to a study by debt charity StepChange, reported in the BBC, millennials were the most likely age group to need to borrow in order to make ends meet.
If you want to gain more financial peace of mind, paying off your personal debts should be a priority. This is because if you don’t pay them off quickly, debts can quickly accrue large amounts of interest, which can put even more strain on your finances and potentially lead to a debt spiral.
3. Make sure you have financial protection
One of the best ways you can get financial peace of mind is by ensuring that you have protection against short-term disruptions. Financial protection comes in a variety of forms, so it’s important to find the one that suits your needs.
Having financial protection in place can help you absorb financial shocks and minimise the disruption they would have on your finances.
For example, if you fell ill and were unable to work temporarily, this might put a heavy strain on your finances, particularly if you had ongoing commitments such as mortgage payments. This is where income protection could help, as it would pay you a portion of your salary after an excess period.
Having protection in place can be a huge weight off your mind if the unexpected were to happen, as you could rest assured in the knowledge that your finances could cope with the disruption.
If you want to get protection but aren’t sure which type is right for you, you may benefit from speaking to a financial adviser who can help you find the most suitable policy for your needs.