Millennial Money: Vanquish these four financial fears

AP – Fear can consume you. The anxiety of the unknown can drive you to pull the blanket over your head, whether you’re worried about a rustling sound outside your bedroom window or that you won’t have enough retirement savings. Financial fears — not wanting to check your credit, confront your debt or even discuss your student loans — can feel especially shameful.

But facing those fears can empower you to take action.

1. STUDENT LOAN STRESS

Student loans topped the list of most-feared financial topics among United States (US) adults, according to a 2019 survey of 1,006 consumers by TD Ameritrade. Student loan debt, at 36 per cent, outranked even living paycheque to paycheque (26 per cent) and credit card debt (20 per cent).

How to conquer it

Paying off credit card debt can feel like a never-ending task, but there are ways to get it done. List each account, interest rate and balance. Then choose a payoff strategy. One popular option is the debt snowball, where you pay off your smallest debts first then roll those payments toward your bigger debts

Understand your loans in detail — that’s key to knowing whether you’re on the best repayment plan. Know each loan’s term, balance and interest rate.

You may be able to refinance for a lower monthly payment (but it may cost more overall).

2. RECESSION ANXIETY

Indicators like slowing global economic growth hint that a recession might be coming, raising fears of job loss and asset depletion.

How to conquer it

Shore up your savings and diversify your skills. Build up at least USD500 in savings to cover an emergency, advises Boston-based financial coach Kimberly Zimmerman Rand. After that, work toward having a few months’ worth of expenses saved in case of job loss. Make saving easier with direct deposits from your paycheque or automatic transfers from checking to savings.

“On the professional side, since we’re not in a recession right now, see how you can improve your job skills, your network, your resume, so if the unfortunate does happen, you’ve already laid the foundation to transition to a new position,” Zimmerman Rand said.

3. CREDIT CARD DEBT CONCERNS

Paying off credit card debt can feel like a never-ending task, but there are ways to get it done.

“I’ve had clients who come to us for debt counselling that have the fear that they’re the worst situation we’ve ever seen financially, and that’s never the case,” said Director of Financial Wellness Maura Attardi at Money Management International, a non-profit credit counselling agency.

This fear can be a self-fulfilling prophecy: You’re afraid to check your overall debt because of how high it might be, but while you’re not looking, you keep accruing interest.

How to conquer it

List each account, interest rate and balance. Then choose a pay-off strategy. One popular option is the debt snowball, where you pay off your smallest debts first then roll those payments toward your bigger debts.

4. BROKE RETIREMENT BLUES

“Among my clients, there’s a kind of feeling of hopelessness when it comes to the idea of retiring,” Zimmerman Rand said. But starting early is most important, not waiting until you can put away a lot.

How to conquer it

If you have a workplace retirement plan that offers an employer match, contribute enough to get it. An individual retirement account is a good alternative if you don’t have a workplace plan.

Set yourself up for success by automating contributions and bumping up how much you’re saving every time you get a raise.

Avoid withdrawing money from your retirement account to get the maximum benefit from compound interest, where you earn interest on your interest.

“The magic of compound interest is truly magic — and it works,” Zimmerman Rand said. “After you’ve been saving for years, your investment begins to double a lot faster. For millennials, now is the time to start investing.”