What financial problems are facing by youths and how it affects their future?

 Whenever there is an economic crisis, it brings more need to be financially literate. Do you know why?

What drives you to be financially literate?

After globalization, the risk is enhanced in the finance industry as financial markets require adequately skilled to be able to make cognizant financial decisions. Research conducted across the world indicates that financial illiteracy is prevalent even in well-developed financial markets like Germany, the Netherlands, Sweden, Japan, Italy, New Zealand, and the United States. It is found that a significant percentage of young adults are “Financially precarious” because they had poor financial literacy and lacked money management skills and income stability.

As the finance industry becomes digital, this declines the role of governments and employers in managing investments, it increased your role to manage your own finance using digital tools promoting Fintech industry. In India, the increasing trend of borrowing amongst the young population worse their financial condition. RBI data on sectoral deployment of bank credit, personal loans which include home, vehicle, and education loans accounted for a record 96% of incremental non-food credit in the last financial year, mostly professionals in the age group of 25-45 years who are availing personal loans. In a survey by financial services giant Visa, Indians emerged as one of the least financially literate among 28 countries, this is because of poor understanding of money management principles and a lack of financial education.

“When you start to earn money without being equipped with the proper knowledge and skills to manage, there may be a chance to ruin it unknowingly”.

When you reach at age of 15-16 you must have an idea about the stock market and different saving schemes which you can use.

How do millennials stand financially?

It is to concern that when it comes to finances, youth are little behind. Millennial fare poorly when it comes to financial literacy and understanding of investing fundamentals which limits your chances of long-term wealth accumulation and investment returns the best way in which you can deal with the current anxiety related to financial investments is to improve the understanding of different asset classes. Saving for retirement is another area that you need to champion to improve your financial lives; lack of financial knowledge is a key reason in the negligence towards retirement planning. The younger population value experience over materialism which is a healthy sign for society, but you need to balance your spending on leisure activities and contribute a portion to long-term financial goals. Many things worry you and to handle them is not easy lower wages, higher housing prices, student debt, and living costs complicate your financial lives. You have to be smart about your financial planning there is the only way to rid your worries is to create a strategy for handling the existing money issues and execute it.

 Addressing money issues among millennials

In a report, nearly half of the millennial generation about 45% worries about debt, even more than they worry about their job or health. Another study reveals that two-thirds of millennial lose sleep over money issues, some findings of the industry represent are:

Financial worries keep 66% of the millennial awake at night.

Another reason for stress is the image of a successful life pictured by social media, at least 66% of millennial blame social pressure to accomplish certain milestones by a pre-defined age for additional stress.

It is critical to add that money is a topic of concern for all the generations but millennial especially in the age of 18-34 years old bracket is apparently the worst affected. It is to be noted that millennials are facing altogether different challenges in their lives including both micro and macroeconomic factors. For instance, the average personal debt between 2010-2016 has grown by 28% for individuals in the 16-34 year age bracket versus 5% for individuals in the 35-44 year age bracket. And If I talk about macroeconomic factors, millennials are paying almost a quarter (23% of their salary in housing costs, which is much higher than baby boomers, who spent an average of 17% at the same age.

How Financial IQ makes a difference in being financially literate?

Financial IQ is assessed by how well you do with money. Having a high financial IQ doesn’t mean that your investments outperform the marketer predict, you will retire a millionaire rather it means you handle money responsibly. You make smart money decisions spend and save according to plan . People with low financial IQ tend to focus only on spending, while those with higher financial IQ also focus on savings. Increasing financial IQ may take your time and energy as it is not an overnight process.

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