Not everyone with a higher income is better off financially. They have a credit card balance, and one-quarter of those consider it “positive debt,” despite the high-interest rates.
Even though half of all wealthy eliminating that debt ranked just sixth on the list of priorities stated by this same group of people in a national survey of 1,405. For this demographic, paying for day-to-day expenses and related bills comes first (88%), followed by retirement savings (79%), and finally, debt repayment (77%).
Why Do Well-Off Gen Yers Have to Credit Card Debt?
Among the wealthy millennials questioned, 39% came from low-income households, putting them at a financial disadvantage from the get-go. Furthermore, people currently carrying debt are more likely to come from a family who battled to keep work (34% vs. 26%) or live within their means (44% vs. 31%).
Stats on Credit Card Debt and Children
“We are the products of our surroundings,” says Erika Rasure, president of St. Louis Financial Therapy and assistant professor of business and financial services at Maryville University
Financial difficulties may or may not be passed down through the generations, but if they are, education is the key to changing those destructive patterns. Many members of the millennial generation are ill-equipped in this area, too. The likelihood of someone repeating a bad habit is high, Rasure says unless somebody intervenes to raise their awareness of the pattern.
Impact of Early Financial Education on Adult Financial Behavior The Development of Mature Financial Practices 45% of affluent millennials say they wish they’d known more about credit cards in high school, which is true even among those who don’t carry a balance.
Clinical assistant professor at Tulane University’s School of Social Work and expert on mental health and financial literacy Lauren Terzis says, “That’s a significant age.” You’ve just started working and learning how to drive, so it’s time to learn how to handle your finances
Methods for Reducing Anxiety and Stress Caused by Credit Card Debt
These straightforward actions can help anyone, regardless of age or debt level, pay down credit card debt and put themselves up for a more secure and less stressful financial future:
Create a plan to pay off your debt by listing all of your credit cards, loan balances, and any outstanding obligations. After calculating your total debt, you should immediately begin making payments more significant than the minimum required. Reduce unforeseen costs, such as impulse buys, and apply the savings to paying down your credit card balances. Beginning with a manageable objective like this can serve as a springboard for further progress.
Take Advantage of Credit Cards, But Don’t Go Overboard: Just because you have a good income doesn’t mean you should use credit cards to fund a lavish lifestyle. Building wealth over the long run is impossible while simultaneously increasing debt levels. Be responsible and only charge what you can afford to pay back in full (and on time) each month.
Start Communicating If you’re having trouble making ends meet because of credit card debt or are feeling insecure because of your lack of knowledge, talk to those you trust. You should know that you’re not alone in experiencing difficulties like this. Making small talk about credit cards a regular occurrence will make talking about them less daunting, and you could pick up some helpful information in the process. Your confidence and financial mastery can increase after consulting a competent financial advisor.
This poll aimed to determine what factors influence millennials’ financial decisions, especially concerning saving, spending, and investing. By focusing on respondents with the means to buy and invest, we were able to rule out the possibility of extreme financial hardship as a reason for their lack of engagement with the financial system, allowing us to understand better their perspective on money and how their financial education has influenced their decisions as adults.
The Balance was needed to ensure the right questions would be posed in the language that would resonate with the respondents before they sent out their quantitative survey. The Balance and Chirp conducted 9 one-on-one interviews with people in Birmingham, Chicago, Dallas, and New York City. Each interview lasted 60 minutes. The interviews focused on how financially secure millennials talk about their experiences managing their money and their values concerning saving, spending, and investing.