A recent study by the Money and Pensions Service, published by the BBC, found that almost two-fifths of Brits are keeping money secrets from their loved ones. It also showed that millennials were the biggest offenders, with three-fifths of them hiding details of their finances.
In recent years, many millennials have found themselves squeezed between rising housing costs and stagnant wages and this can make them vulnerable to financial shocks. As a result, many millennials find themselves worrying about money.
If your finances been impacted by the lockdowns and have been causing you undue stress, read on for three tips to gain more financial peace of mind.
1. Build up an emergency fund
One of the simplest ways to gain financial peace of mind is to build up an emergency fund to help you absorb financial shocks more easily.
According to a study by the Yorkshire Building Society, reported by Money Expert, 26% of Brits don’t have sufficient savings to last a month if they were made redundant. Furthermore, 15% have no savings at all, which is a worrying figure given the current economic instability.
Building up an emergency fund can be the first step to creating financial stability, as having such a fund at hand can give you a useful buffer which will let you absorb economic shocks more easily. It can also help you from having to rely on credit if you cannot work for a period of time.
Most experts typically recommend that your fund should contain enough for approximately three to six months’ worth of expenses. This should be enough to give you peace of mind. knowing that even if the worst should happen, you’ll be able to keep paying your bills whilst you get back on your feet.
However, if you are self-employed or work in a field that is particularly at risk, you may want to consider keeping a larger fund.
It is never too late to start building up an emergency fund and you can begin by saving small amounts here and there, such as by paying any unexpected money into an easy-access account.
However, if you’re struggling to find enough money to build an emergency fund, you may want to speak to a financial adviser. An adviser can help you to manage your money in a more effective way so that you can afford to put some money aside for when you need it.
2. Pay off your debts as quickly as you can
According to a recent study by market research firm Mintel, millennials are the UK’s most indebted generation. More than a third of millennials (36%) reported that they were ‘uncomfortable’ with their level of debt, this number having risen from only 27% this time last year.
The economic impact of the coronavirus and the subsequent lockdowns has meant that many millennials were unable to work. This has led to many falling into debt as they have to borrow to pay essential bills.
According to a report by StepChange, reported in the BBC, millennials were the most likely age group to need to borrow to make ends meet.
If you want to gain more peace of mind regarding your finances, paying off your debts should be a priority. If not quickly paid off, debts can accrue high levels of interest which can put even more stress on your household finances.
If you’re repeatedly struggling to make ends meet, you may benefit from seeking help from a financial adviser, who can help you to reorganise your finances so that you can stay on top of your bills.
3. Make sure you have the right insurance in place
A mortgage is likely to be one of the biggest commitments you make in life, which is why if you have one, you should consider making sure you have the right protection. Having insurance in place can help you to rest assured that, if you were to pass away before your mortgage is repaid, your loved ones would not suffer financially.
Despite this, according to a recent study by Legal & General, around 40% of millennials with joint mortgages have no life insurance in place, despite over a third of these admitting that they would be unable to keep up with payments if their partner passed away.
One of the reasons that many millennials don’t have protection in place is because they tend to overestimate the cost.
When a sample of millennials was asked how much they thought a life insurance policy would cost to cover a 30-year-old non-smoker for £100,000 for 30 years, their average answer was three times the actual cost.
Furthermore, the study found that approximately four-fifths of millennials didn’t understand how level-term or decreasing-term life insurance worked.
Speaking to a financial adviser about getting insurance can help you rest assured knowing that even if you were to pass away, your loved ones would be looked after financially.
Get in touch
If you’re a millennial and find yourself worrying about the state of your finances, we can help. Email enquire@london-money.co.uk or call us at (0207) 808 4120 to find out more.