Millennials: Still Great at Saving Money

Last year, we published an article that pushed back on the media’s lazy millennial theme. It was called “Millennials Aren’t Bad with Money After All.” We noted that millennials are actually excellent at saving money despite large student loan debt. One year later, we wanted to check in and find out how millennials, as a group, are doing with regards to saving. The answer is “great.”

Millennials continue to save and manage money well compared to other generations. The statistics include:

Why Millennials Save

If you read personal finance stories, you find two big reasons millennials are better savers. First, the retirement options now are less attractive than they were for Baby Boomers and even early Gen Xers. There really were more pensions (defined as you worked a certain number of years and earned a certain amount of benefits) in the past. One shocking comparison puts it all into perspective:

In 1985, 90% of Fortune 100 companies offered a pension; by 2012, that number fell to 11%. (http://www.workforce.com/articles/fewer-employers-offering-defined-benefit-pension-plans-to-new-salaried-employees)

When you combine this fact with the opinion of a solid majority (60%) of millennials that Social Security will go bankrupt before they retire, you have a recipe for more savings. After all, no one wants to eat cat food in old age.

The Great Recession is another cause for the higher savings rate. Millennials saw older Americans experience major declines in home equity and stock market wealth. At the same time, unemployment and underemployment also increased sharply. Millennials want a bigger financial cushion in case they have to deal with large financial problems.

What This All Means

Millennials are, as a group, good savers who want to save more money. This finding points tomajor business opportunity. If you are in the financial services field, make sure you market your products to millennials. Do not buy into stereotypes that only middle-aged and older adults are interested in financial products. Skipping over millennials means overlooking a lot of potential customers.

The fact that millennials are better savers might have serious political ramifications as well. If a large number of millennials continue to believe that Social Security will not be there for them, it is hard to imagine they will be satisfied with large amounts of taxes being taken out of their paychecks. High student loan debt and low wages are major impediments to millennials achieving their savings goals. With millennials becoming a greater share of the voting population, politicians will need to address these real concerns in order to win elections. The impressive performances of Donald Trump and Bernie Sanders, which virtually no political pundits saw coming, might be the first rumblings of major policy battles ahead.

Millennials, overall, have great savings habits. Make sure you do everything you can to capitalize on this positive trend.

Biggest Reasons to Purchase a House

Getting ready to buy a home is going to be one of the most important things that anyone can do. When you are thinking about your very first home, it is absolutely difficult to know where to start, but at the same time you need to start somewhere. Take a look at the following information for you to start considering now in order to be totally prepared when it comes time to actually make that first buy.

Saving Up Your Down Payment

The key to many loans will be saving up as much as possible. Obviously it is important to know just how much you can borrow, but at the same time you also don’t want to borrow because of the whole concept of interest. It should make sense that you wouldn’t want to be spending significant amounts of money towards just paying off interest, so saving up as much as possible now (even if you are only thinking there’s a slight possibility of buying) will absolutely save you hassle and will let you have more flexibility when you get to the home search. Every penny counts, and when you consider the lending equations and formulas, it is far more than a one to one ratio. The more you save now, the higher you can borrow later.

Know How Much You Can Afford

The idea of borrowing a large amount goes hand in hand with how much you make as well as what the rest of your debt actually is. The amount that you can borrow towards a home has a specific formula that will depend upon the bank, plan, and program you are in. At the same time, the numbers are typically pretty consistent. What you need to know is that when you are actually looking at the number that you will be able to borrow, it has to fit in with the rest of your monthly earnings.

When you think about the one thing that can get you the farthest ahead, you will want to start paying off as much short term debt as possible. Not only will this have a greater effect on everything else in your day to day life (who doesn’t like paying off bills), you can absolutely see your potential home loan go up as you pay down other debt. This should make sense because if you owe less in other debt then a bank will feel more comfortable with giving you a bit more towards any new home.

Get Your Credit Score

The credit score is one of the most powerful numbers in finances around the world. People need to know what their score is and they also need to be able to update it as soon as they have the ability to do so. Credit scores are not just a fun way of seeing how much you have missed payments, borrowed responsibly, or have kept your word when it comes to paying bills, credit scores are literally the currency of borrowing.

When you have a high score, banks will trust you more. Furthermore, you don’t just need to get over the hurdle of a certain credit score number in order to be able to qualify for a loan; you also need to be able to get as high of a score as possible so that you can bring your mortgage interest rates down as low as possible. In the grand scheme of things, ticking a few interest points up could mean you aren’t able to afford as much of a house as you wanted to, and by ticking a few interest points down with a higher credit score, the lower interest rates may mean you can afford the same house for much less money.

Future Economic Expectations

Something to keep in mind is simply the idea that buying a house is a big decision. Not only is it a big financial decision because of the amount of the debt that you will take on, but it is also a major responsibility and even risk because you are essentially committing a strong portion of your money for the next thirty years. In order to truly be comfortable with signing on for the next three hundred and sixty months (or possibly even more), then you have to be fairly confident in the economy for the next thirty years as well. After all, would you truly be comfortable with committing assets and portions of future paychecks to a debt if you didn’t even know if you would have a job?

Future Regional Expectations

Aside from the idea of the global or national economy as a whole, when you are looking for the ability to purchase a house you also have to be comfortable with the future expectations of the region. Just imagine if you were going to buy a home and take out a hefty mortgage and then the property values in the region tanked. Your mortgage and debt would be much higher than your property would even be worth, and that would be a difficult pill to swallow when you think about overpaying for a home.

If you are comfortable with the region in general and think your property value will at the least maintain value but hopefully grow in value, then you have a much better shot to be able to grow some equity but at least be confident in your purchase in general.

Personal Expectations

Finally, when you are actually getting ready to make the decision to find the perfect house for sale with DDProperty, you have to think about what your specific future plans are. While it may not be a problem to think about moving in a few years or somewhere down the line, you also need to be comfortable with the fact that you could be spending countless amounts of money on closing costs, realtor fees, and financing down payments if you were going to buy a home but not stay there.

If you are considering moving across the country (or the world) for a job, growing your family and needing a bigger house, or even just getting sick of the area, you may want to think about what you are committing to. Obviously owning a house has a significant amount of benefits, but you absolutely need to be sure you aren’t wasting time and resources just so that you can wind up having a home for the short term. Understand what you actually want out of a home and you will have a much better financial opportunity waiting for you.

As you can see, while many people just start to assume that buying a house is about picking out a style of home and then preparing to paint and put up curtains, the key to buying a house is putting yourself in a much better financial position than you have ever been. Banks will be far more comfortable lending you money if you can clean up your financial act and history. Furthermore, by understanding or projecting what the future markets will do, and by better understanding yourself, you could wind up saving thousands of dollars and significant effort in general. Pay attention to what the realtors and the mortgage lenders pay attention to, and you can get that much closer to the house of your dreams.

The importance of understanding emerging markets as a small business owner

The emerging markets are a land of opportunity for investors and business entrepreneurs. They also represent an area of inherent risk. However, in the competitive marketplace, businesses need to look for ways to reduce costs and increase profit margins – and the emerging market is a good way to achieve this.

The emerging markets are actually much closer than you may think. Although many people still think of the Far East and South America, we now have emerging markets within Eastern Europe and just beyond in Turkey. Africa is also now becoming an exciting new region for many investors.

For business owners, emerging markets are an opportunity to source cheaper labour and products. Both the manufacturing and service industries can make significant savings by outsourcing to emerging markets; as many companies are already doing. Some business owners are taking this one step further by investing in companies overseas that support services; this is a clever way to help cheaper suppliers stay in business while also benefiting from a growing economy.

Africa

One of the most interesting emerging economic regions at the moment is Africa, and this includes the Seychelles. This is a region where the middle class is growing exponentially. It is estimated that the world’s middle class population will nearly double from the 2009 figure of 1.8 billion people to 3.2 billion in 2020 – and many of these middle class people will be in Africa.

In countries such as South Africa and Nigeria, many people are now obtaining college qualifications and going on to run successful businesses. One major change in recent years is that many new businesses are quickly utilizing the benefits of the internet to reach customers overseas.

Nigeria is Africa’s fastest growing country and is becoming a dominant force in the continent; if growth continues it could soon rival South Africa as the largest economy on the continent. Egypt is another of Africa’s growing economies and due to its favorable location, it has great potential to support European businesses.

The Middle East

Many of the Middle Eastern economies are experiencing economic growth, and are actively seeking international trade links. Countries such as the United Arab Emirates have grown to prominence in the luxury markets, and other countries are hotbeds of business and investment opportunity. The growth in technical infrastructure in the region is helping to connect more of the Middle Eastern customer bases to the global digital marketplace. Entrepreneurs such as Ehsan Bayat, who split their time and business between their native countries and the United States, are proof of the growing cooperation between East and West.

Have an escape plan

The emerging markets can be extremely volatile so it is important for businesses to develop a contingency plan when dealing with them. For example, if a new supplier is sourced from a newly emerging economy then a business may be able to purchase products at a lower price to increase profit margins or reduce their prices to undercut the competition. However, the business should be prepared for the worst case scenario; the supplier could suddenly close down or supplies could be temporarily cut off due to unforeseen circumstances.

If risk is managed and plans are in place to cope with worst case scenarios, then the emerging markets can be a land of opportunity that will allow a business to succeed over the competition and ultimately win a larger market share.

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