Seattle is a tough place to start a career, as the cost of living is quite high (particularly housing). However, for everyone that feels this way, you are in good company. Millennial financial stress reflects Seattle’s high cost of living.
Recently Wells Fargo published Millennials, Money, and the Happiness Factor report, which surveyed 1,700 Millennials between the ages of 20-36. The information gleaned from this report suggests financial matters may a major stumbling block for working Millennials in their quest for happiness. Employers, take note! According to a survey by Mercer Consulting, the average worker spends 5 hours a month worrying about finances while at work.
What are Millennial happiness drivers? Relationships.
The survey asked Millennials to rate the one thing they associate with happiness. 85% of respondents said “Love” or “Doing good”. Only 10% said “Money”. Clearly, the keys to unlocking the happiness door is not seen as coming through power or money. Also, this generation is a relatively happy one, as 62% of respondents strongly agreed with the statement: “In general, I consider myself happy.”
However, … there is also a practical side to this cohort. But all is not perfect. This generation is burdened by record high student loans and they are currently staring at the prospect of taking on even more debt … in the form of a home mortgage tied to high residential real estate prices. It may come as no surprise that financial security is ranked as the top priority in the survey (98%). Yet, when you examine specific areas where Millennials are rate their current life satisfaction, few reported being satisfied with work (40%) or finances (32%). Said another way, Millennial financial matters are a stumbling block on their road to happiness.
What Needs to Be Addressed? Unless some key trouble areas get addressed, these financial issues will be the cause of lingering anxiety. I believe the areas that need to be addressed are:
- Financial Literacy: Only 51% believe they know everything they need to know to manage their finances successfully.
- Debt & Expenses: 46% say they have significant debt. 43% can’t pay health care expenses.
- Lack of Support: Because of high debt levels and low net liquid assets, few Millennials have financial advisers (23%), as traditional pricing structures don’t work for this group.
- Long-Term Game Plan: “Saving for the future” was the top ranked intimidating money challenge (23%). Lacking a long-term game plan can heighten financial insecurity.
How to Make Constructive Changes To Reduce Millennial Financial Stress
There are a number of workplace solutions to mitigate Millennial financial stress (and their employers’ stress too).
Identify the financial areas in your life that cause the most anxiety. Is it using credit cards & sticking to a budget (basic finance) or a more complex issues (knowing how to invest, saving for retirement, saving for the future)? In the workplace, you can:
- Understand Your Benefit Package: Too often I see benefits that are underutilized by employees. Look into flexible spending accounts (FSA), healthcare options, dental insurance & inexpensive life insurance.
- Contribute to Your 401(k): If your employer has a 401(k), you should be contributing to it. This is particularly true if there is an employee match. Tap into the financial education resources associated with this plan.
- Educate Yourself: There are hundreds of free online tools and smartphone apps that can help in this regard. However, tackling the more complex issues may take some more work and thought, but it will be worth it.
- Access Professional Financial Advice: Many times there is a professional financial adviser who educates participants on how to use the plan. Call them if you have a question and they will likely help you navigate to a solution that works for you.
Small Businesses with Millennial Employees:
Workplace distractions due to finances are real and can lead to poor performance or turnover (or both). Therefore, consider offering & supporting these benefits to address your employees’ concerns. Small businesses need to figure out which benefits are of highest value to their team, as implementing all of these benefits can be extremely expensive. To my current small business clients, I always stress the importance of supporting these programs after they are made available. Too often I see great benefits that are not utilized by employees who should value them, but don’t. These are the same employees that jump to another job for a “higher salary” – but it is often the same compensation package with lower benefits.
- Health Care Benefits – Single most valued benefit by employees, but costly
- Financial Wellness – Common sense techniques that move the meter for people struggling with the basics
- 401(k) & Retirement Benefits – Incredibly efficient way for your employees to tap into more sophisticated financial advice
- Flexible Savings Account – a tax advantaged program geared towards those with near-term spending priorities (healthcare, childcare)
Still Have Questions about Millennial Financial Stress?
Set up a meeting with me. In one 15-minute meeting and we can quickly look at what would be the best solution for you or your company.
To view the full report, please visit: https://www.wellsfargofunds.com/ip/campaign/millennials.html