In today’s economy, millennials – both men and women – are in bad situations: tremendous student and consumer debt levels, a lack of lucrative career options and a soaring cost of living. All of these are ingredients to a future recipe of uncertainty, and a lifetime consumed by financial insecurity.
When it comes to looking at the demographics, millennial women have it worse than their male counterparts: they aren’t saving for a rainy day or putting money aside for their retirement, according to a study released last month.
A recent Wells Fargo study found that 61 percent of millennial men have initiated their savings plans for retirement, while only half of millennial women have started saving for their winter years. Also, just 41 percent of millennial women are satisfied with their savings level, compared to 58 percent of millennial men.
These statistics spell trouble for the future of women born between the years 1981 and 2000.
“Millennial men are earning more, saving greater percentages of their income and report having more accumulated assets. Women are lagging behind men in their savings efforts, and this could explain why they feel less satisfied with their overall financial situation,” said Karen Wimbish, director of Retail Retirement at Wells Fargo, in a statement.
What’s going on here? Why aren’t female millennials making strides in their finances? There are a number of facts to consider when attempting answering those questions, particularly when it comes to the aforementioned issues of debt and the labor market.
First, the figures suggest that women are earning less than men. For instance, the Wells Fargo report discovered that the median annual household income for millennial men was $77,000, compared with $56,000 for women.
However, as previously noted, it’s difficult to examine pay grades between men and women because analysis has provided incredible insight into the gender pay gap myth: both genders choose different kinds of occupations, both genders have different career goals and both genders seek out workplace flexibility.
Another important problem, according to researchers, is the fact that women are less financially literate than their male counterparts. A study by the Financial Industry Regulatory Authority (FINA) discovered that only 18 percent of female millennials showcased high levels of financial literacy, compared to just 29 percent of millennial men.
Risk is another crucial factor to examining the saving habits of men and women. The financial institution looked at previous research and found that women are more risk averse than their male counterparts. This means that women are less willing to take risk for the potential of a big reward, which essentially equates to diminished opportunities for investments and dividends.
“The silver lining of the recession that started over five years ago is that a majority of millennials get that saving is a necessity and even equate it with ‘surviving’ tough times,” added Wimbish. “But millennial women are starting out their working lives making far less than men and, as a consequence, are saving less and feeling less contentment at the start of their working lives.”
What’s the solution then? Indeed, there are a variety of steps that millennial women can take in order to boost their retirement, emergency and rainy day money accounts, but it does take patience, strong willpower and dedication to start accumulating enough funds to acquire assets and become financially secure.
Here are three ways to begin remedying those financial woes of millennial women:
Pay yourself first and last
Whenever you get your paycheck or any sort of funds, pay yourself first. The recommendation among financial professionals is to always set aside at least 10 percent of your income. After you have finished paying off your rent, utilities and bills, set aside another five percent of the remaining sum and put it in a high-interest savings account.
Part-time, temp or freelance
If you lack the funds to save then consider obtaining a second part-time job, temporary/seasonal work or freelancing. This way, you can gain some proper footing when it comes to saving money. It’s also possible that you might find new career opportunities, like starting your own business or being offered a managerial position at a company.
Invest a little
In today’s market, a lot of people are afraid to put money into the market because they’re worried about losing it or they don’t feel astute enough to do so. However, investing a little bit at a time can go a long way to building a nest egg. Rather than doling out 65 percent of your savings, think about putting $25 a month into a mutual fund or purchasing precious metals.
Saving and investing isn’t the most complicated or strenuous thing in the world to do. Baby steps is the key to producing a nice little nest egg for yourself, your family or your household once you start reaching your senior years. Sacrificing a tiny bit now can lead to big rewards down the road.
Are you a millennial who saves a lot? Tell us your tips in the comment section.