Smart SpendingSmart Spending

5 smart money moves to make before 30

As millennials start to grow up, they're finding plenty to worry about financially. Here are five steps young people can consider to help ease their financial futures.

By Smart Spending Editor Jun 6, 2013 5:22PM
This post is by Kimberly Palmer of partner site U.S. News & World Report.

MSN Money PartnerMillennials, the current generation of 20-somethings perhaps best known for their tech-savvy ways, are growing up. The oldest members of the group are now turning 30, which means they increasingly have adult money issues on their minds. The need for long-term savings accounts, retirement funds, debt payments, mortgage payments, and family-related costs are among the responsibilities weighing them down.

Image: Couple kissing © Aurelie and Morgan David de Lossy, Cultura, Getty ImagesThe good news is that the financial services industry wants to help. Eager for younger customers’ business, they have been busy analyzing millennials’ financial challenges and trying to figure out how they can best reach out to them. As a result, a handful of financial services companies recently released money tips for millennials. Here are five of the best ones:

1. Save like it’s 2009
Savings rates tend to go up during recessions, which is why personal savings rates shot up in 2009. The fear of financial instability appears to motivate people to squirrel more money into the safety of bank accounts rather than squander it on new shoes or a new smartphone. Millennials could use some of that motivation, since many have yet to start padding their bank accounts or saving for retirement.

A recent Wells Fargo Retirement Survey found that 2 in 3 millennials consider themselves “savers,” with men more likely than women to do so. Still, just over half of the group says they haven’t started saving yet — but plan to by age 30. The reason for that lack of saving? Most respondents said they simply didn’t have enough money.

Those who had found a way to start saving tended to have some help from their employers; most of those saving for retirement are using employer-sponsored plans, the survey found. Around half of those saving are putting away between 1% and 5% of their income, 31% are saving between 6% and 10%, and 14% are saving more than 10%. (Financial advisers generally recommend saving between 10% and 20% of your income over your working years, with the goal of replacing 80% of your income during retirement.)

Karen Wimbish, director of Retail Retirement at Wells Fargo, urges millennials to get started with saving as soon as possible in order to benefit from compounding interest. Having more money in the bank, she says, can also provide a confidence boost when it comes to achieving long-term goals.

2. Get over your fear of the market

Given that millennials came of age in the era of Bernie Madoff and the subprime mortgage crisis, it’s no surprise that more than half profess a lack of confidence in the market, according to the Wells Fargo survey. Women are particularly wary, with two-thirds saying they are not confident in the market. The problem with this distrust of the market is that millennials could lose out on the chance to benefit from its long-term growth. After all, millennials saving for retirement have decades to ride out any bumps.

3. Confront student debt
Student loans are a huge source of worry for millennials. Most respondents cited it as their biggest financial concern in the Wells Fargo survey. The survey also found that millennials were about twice as likely as boomers to feel overwhelmed by their debt (42% versus 22%).

4. Chat about money on dates
Okay, maybe not the first date, but USAA financial planners suggest talking about money, and credit histories in particular, with long-term mates. USAA put out a release urging millennials to ask their partners how much debt they have, as well as get an overview of assets, before exchanging vows. The reason? A bad credit score can derail post-marriage plans, from buying a house to purchasing a new car.

Smart Spending on the go: Get our app for Android or iPhone

5. Get a job, not a degree
Obtaining advanced degrees can make sense in a lot of situations, but USAA financial planners also warn against using school as a second-best option when the job market doesn’t work out. Returning to school often means building up more debt, and if the degree isn’t directly related to your future career, it might not pay off in the long run.

If you’re a millennial (or the parent of one), don’t let all these financial burdens get you down too much. Millennials might have a lot on their financial plates, but they also have a lot of financial potential.

More from U.S. News & World Report:
Jun 7, 2013 9:11AM
Shortly after I got my first job as an adult, I began a program of investing based on the continually-compounding reinvestment of reliable dividend streams from common stocks and (then) municipal bonds. The effect over many decades has been and still is remarkable. The arithmetic is inescapable.  I have given advice based on this principle of investing to many young people starting their careers. Those who followed it were very happy that they did. I would also add that one should ignore the financial static and talking heads. You and brokers are on different sides of the dollar. Index at the lowest cost possible. Dollar-cost-average. Diversify. Remain optimistic, especially when everyone else seems not to be.
Jun 7, 2013 10:05AM
My wife works at a private university and tells me the bulk of the students live on loans and refuse to leave college because the loans are their income and they can continue to defer paying them off while they're enrolled.

Want to talk about the new financial crises.......student loan debt.

Jun 7, 2013 9:31AM
I completely agree with #5. I got an MS in a very specialized field and found I couldn't find a job because every job required experience, and no one really cared that I had the advanced degree. I have found work in related fields, but at every interview, I get asked "why aren't you working in the field of your degree?" and it's gotten to the point where I'm thinking of taking the degree off my resume. Luckily, I didn't go into debt to pay for this degree, but I advise people against graduate degrees now, unless it's requirement of their field (like in speech language pathology, for example).
Jun 7, 2013 10:37AM

I disagree on returning to the safety of grad school.  Of course it depends on a number of factors.


A specialized postgraduate degrees entrenches you in a field that may not have room for more entrants.  Certanly not something to do pre-career unless your career goals require it (researcher or post-secondary education for instance)  However, getting an MBA during times of strife can be exceedingly helpful. You've already proven your ability to learn to lean with your BA, afterward it's a matter of showing that you have more depth and breadth of knowledge. Attaining an MBA teamed with a technical degree suggests a person who can allocate resources better. It means eventually managing the research or engineering team instead of being a reseracher.

Plus, it's generalized so if your primary field of study doesn't pan out at all it's applicable in a wide variety of places.

Certainly more valuable than waiting tables for 2 years.

Please help us to maintain a healthy and vibrant community by reporting any illegal or inappropriate behavior. If you believe a message violates theCode of Conductplease use this form to notify the moderators. They will investigate your report and take appropriate action. If necessary, they report all illegal activity to the proper authorities.
100 character limit
Are you sure you want to delete this comment?


Copyright © 2014 Microsoft. All rights reserved.

Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.


Smart Spending brings you the best money-saving tips from MSN Money and the rest of the Web. Join the conversation on Facebook and follow us on Twitter.