The current workforce consists of a considerable percentage of millennials. It is estimated in a study by the University of North Carolina that nearly 50% of the workforce will consist of millennials by the year 2020. With such a large proportion being millennials, the big question that arises is whether they are equipped enough to conduct their finances wisely. Can they manage it better than the previous generations?
The Gen-Y, famously known as the millennials have lived through the infamous recession that crippled the global financial market a decade ago. It is safe to assume that living through the financial crisis have made them more aware of the tough choices and consequences they can face financially. But are they financially literate to make the right choices?
A report by the investment banking giant Goldman Sachs states that millennials are more adaptive to technology than the generation that preceded them. “So what?”, you might ask! The connection is that most financial instruments now provide services through mobile apps, reducing the gap between the young population and various financial aids. This allows the millennials to be updated with their monetary commitments, but does it make them financially literate? Access to cash goes hand in hand with financial literacy to make the right investment and the right choices.
Here are ways to stay financially literate and make the right financial choices.
- No further loans should be taken to repay what has already been borrowed
A debt trap is created when new loans are taken to repay older loans. The repayment of a loan must come from income.
- Place a curb on spending and usage of credit for consumption
Learning to live within means is not easy. Adopting a lifestyle that is in line with earnings, making sacrifices to ensure that debt is paid off, as a means to come back debt-free are all decisions that require determination. There are several instances of psychological damage that severe indebtedness can create, including depression and suicidal tendencies. It is important to take help before it is too late.
- It is important to see that debt can be reduced only by repayment
Deepening the crisis by borrowing more are not solutions. Debt incurred must be repaid and figuring how this can be done is what debt restructuring is about. Seek help before it is late.
- Seek help to restructure and re-organize existing loans
Many banks have a debt restructuring and advice facility that helps chronic borrowers. There are also external agencies that can help. Seek professional help to see what it is due, and how can be reworked. Credit card dues can be converted into personal loans; penalties can be negotiated for waiver; repayment schedules can be structured in line with capability of the borrower.
- Do not hesitate to put assets to use
Assets such as house, investments, provident fund balance and gold, can be pledged or mortgaged to raise money. Assets can also be sold to repay the loans. Many borrowers worry about saving face and social costs. With some help, they may be able to make decisions that have short-term costs but long-term benefits.