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Millennials Show Alarming Gap Between Financial Confidence and Knowledge

Millennials Show Alarming Gap Between Financial Confidence and Knowledge

Millennials are overconfident and under-prepared when it comes to managing their money, according to new research funded by the National Endowment for Financial Education® (NEFE®) and conducted by George Washington University. They consider themselves far more knowledgeable financially than they actually are.

“Millennials are known for having unrelenting belief in their own abilities. This generation is diverse and highly educated. However, their overconfidence puts them in an extremely fragile financial position, and sadly, they don’t realize it,” says Ted Beck, president and CEO of NEFE.

Only 24 percent of respondents showed basic financial literacy in the study, with just 8 percent showing a high level of knowledge. Yet, 69 percent gave themselves a high self-assessment of financial knowledge.

“What young adults don’t know about money can hurt them,” says Beck. “This is our opportunity to reach them with relevant financial education to help close the gap.”

Financial Strengths: On paper, millennials are highly engaged in their financial lives. “It’s time to stop defining this generation solely by their student debt load. The picture is more nuanced,” says Beck.

The majority (88 percent) are banked, and 51 percent have a retirement account. Over 40 percent own their homes and one-fourth have investments in stocks, bonds or mutual funds.

Debt: However, on the other side of the balance sheet, millennials are heavily indebted and borrow against their assets. The majority (53 percent) feel they have too much debt. Two-thirds have at least one source of long-term debt (student loan, home mortgage, car loan), and 30 percent have more than one source of outstanding long-term debt. More than one-third have unpaid medical bills. About 20 percent of those with a self-directed retirement account either took a loan or made a hardship withdrawal in the prior 12 months.

“Young adults may not understand the consequences of their actions, such as how taking money out of their retirement accounts now has an exponentially negative effect on account balances in the future,” adds Beck.

Financial Satisfaction: Young adults also don’t feel good about their finances. Nearly one in five (18 percent) are “not at all satisfied” with their current personal financial condition; only 6 percent are “extremely satisfied.”

Financial Fragility: Many millennials are financially unprepared to handle sudden economic shocks. When asked if they could come up with $2,000 if an unexpected need arose within 30 days, nearly half (48 percent) said they probably or certainly could not come up with the funds. Less than one-third (32 percent) have set aside funds to cover three months of household expenses. Nearly 30 percent of those with bank accounts had overdrawn their account in the prior 12 months.

“The financial picture isn’t all bad,” says Beck. “But it’s not where it needs to be.”

For complete findings of the research, click here.

Study Details
This research analyzed data from the 2012 National Financial Capability Study (research brief of 2015 data also available), a state-by-state online survey commissioned by the FINRA Investor Education Foundation. The analysis focused on 23-35-year-olds, with a total of 5,525 observations. The study was led by Annamaria Lusardi, Ph.D., academic director of the Global Financial Literacy Excellence Center (GFLEC) and Denit Trust Chair of Economics and Accountancy at the George Washington University School of Business; and Carlo de Bassa Scheresberg, senior research associate at GFLEC.

 

Today’s Guest Article Comes From The National Endowment for Financial Education (NEFE)
NEFE is a nonprofit foundation that inspires empowered financial decision making for individuals and families through every stage of life. For more information, visit www.nefe.org.

 

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Top 9 Money-Saving Dorm Room Essentials

Top 9 Money-Saving Dorm Room Essentials

studentdormFour blank walls, small closets, communal bathrooms and a stranger sleeping in an identical bed three feet from you. Yep, your first dorm room can feel more like prison than an awesome college experience. That’s why it’s essential to transform your dorm room into a nurturing and organized living space where your mind can thrive. Here’s how to invest wisely in dorm room luxuries that will save you money in the long run.

1. Coffee Maker

Kick your brain into high gear with premium coffee made fresh from your dorm room at a fraction of the coffee shop price. Get a capsule espresso maker and automated milk frother that will automatically create delicious espresso and microfoam. This will save you massive amounts if it helps you forgo visits to the coffee shop.

2. Storage Furniture

Furniture that doubles as storage will help you stay organized and comfortable. Storage cubes from Ikea are great for corralling everything from textbooks to clothes to hair products. Knowing where all your stuff is will discourage you from wasting money on duplicate items, and it may even lower your stress level.

3. Clothesline

Air-drying your clothes will save you quarters at the laundromat and reduce wear and tear on your clothes over time, saving you money on replacements. Invest in a foldable clothes drying rack or a portable clothesline from The Container Store that doubles as a cool display for photos, cards or artwork.

4. Refrigerator

Having a mini-fridge is handy for saving leftovers from dinners out. Plus, you are more likely to keep staples like yogurt and milk on hand for quick breakfasts rather than splurging at the corner bakery on your way to class.

5. Rice Cooker

Beside making rice quickly and easily, a rice cooker can be used to make oatmeal, soup, steamed vegetables, and a ton of other things. At just $1-3 per serving for a filling and nutritious meal compared with $10 or more at Chipotle, a rice cooker will save you money on eating out. It can also be a great way to heat up leftovers, and can be stowed away in a closet when not in use.

6. Lapdesk

Extend the life of your laptop by keeping your laptop’s battery cool as you study. Rather than propping your laptop up on a pillow or blanket, stay comfy and cool with a lap desk. Check out Pottery Barn’s selection that includes an internal storage compartment starting at $59.

7. Printer

The long line at the library printer won’t be an impressive excuse to your composition instructor when you turn your paper in late. Avoid stress and save money on printing costs by buying a wireless color printer/scanner/copier like the Canon PIXMA MG3520 or HP Envy 4520.

8. Alarm Clock

Avoid the harmful blue light from your cell phone late at night and early in the morning by opting for an alarm clock that gently wakes you with a simulated sunrise like Philips Wake-Up Light. Research indicates that waking up naturally to sunlight increases alertness, cognitive performance, and reaction times, meaning you could earn better grades, scholarships or work promotions. Say goodbye to that second senior year!

9. Water Filter

Filling a reusable water bottle with water from your dorm room will save you from buying disposable water bottles from the vending machine. In fact, you could save a ton, since some estimates state that people spend 10,000 times more on bottled water than on tap water. For better tasting and cleaner water than regular tap water, opt for an attractive filter like the compact Soma Water Filter ($29) or a portable water purifier like the Sport Berkey ($29).

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A College Student’s Guide to an Affordable, Meaningful Christmas

A College Student’s Guide to an Affordable, Meaningful Christmas

The Christmas season has unfortunately become synonymous with consumerism for many families and individuals. Instead of enjoying the many opportunities to create memorable experiences during the holidays, stress about gift giving can creep in and overshadow all the joy. And if you’re a college student on an already tight budget, this can be especially draining. It’s time to trade in the anxiety for some merriment! Here are some tips to handle Christmas on a budget and still get into the spirit of giving.

Give Your Time

Before you roll your eyes at giving someone else the gift of your time, give this idea a chance! After all, if you’re at a university across the country from your family, there’s probably nothing your parents want more than some quality time with you. Think about meaningful memories you have with each person on your list and try to recreate them this Christmas.

Maybe you and your mom used to watch Christmas movies and sip hot chocolate. All you need to do is buy some hot chocolate and a couple of her favorite Christmas movies, put them in a cute basket and include a ‘coupon’ that’s good for one morning of enjoying each other’s company. You can use the coupon idea for your significant other as well and give the gift of a massage; for your best friend, give the gift of a coffee and shopping date. The list goes on and on. All that’s required is a small monetary investment and a lot of thoughtful intention!

Give Meaning

A lot of people have begun to turn away from the materialistic nature of today’s Christmas season and opt for handmade gifts or giving back in lieu of buying presents. If you have philanthropically-minded individuals in your close network of friends and family members, consider giving a donation to their favorite cause or nonprofit. You don’t even need to announce the amount you’ve donated; simply make a card that includes the organization’s name and shows that you’ve donated to it in that person’s honor.

You can even get your whole family involved! If the rest of your clan is game, make a rule that the only gifts that can be given are those that benefit families in need. Look through a giving catalog to find meaningful gifts like medical care, education and clean water or food in the poorest parts of the world. Then have fun wrapping up a description of what you’ve chosen to give and watch your family delight in knowing other people will be helped thanks to your Christmas gift.

Give Health

If you’re intent on purchasing tangible gifts for the people on your list this year, you can still do so on a budget. The greatest gifts someone could receive are love, health and happiness and, of these, health is probably the easiest to contribute to. If you have a friend who struggles from insomnia, maybe buy her a small bottle of lavender essential oils and a diffuser. Or perhaps you have an uncle who is trying to lose weight. In this case, you could buy him a subscription to a health magazine or purchase a few classes for him at a nearby boxing gym, if that’s a form of exercise he’d be willing to try. The point is to think beyond the typical gifts and find inexpensive items that are thoughtful and health-conscious.

As you gear up for Christmas this year, don’t let the hustle and bustle take you away from the real meaning of the season. You can give your time and show how much you care without breaking the bank. Some extra thoughtfulness will go a long way this holiday season, helping you save money and spread joy!

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Tips For Protecting Your Identity While In College

Tips For Protecting Your Identity While In College

Young adults head off to college hoping they’ll learn enough in the classroom to get their degree, and enough about life to make their way in the world once they graduate. But firsthand knowledge of identity theft is one lesson they don’t want to learn.

College students have little credit history, and often lax protection behavior, making them an easy target for identity thieves. So before you head off (or send your child off) to college, here are important identity theft protection tips to remember (provided by Experian.com):

  • Always keep your dorm room or apartment door locked, even when you’re home. Most identity theft still occurs in mundane, nontechnical ways, like a wallet being stolen from a drawer or a purse taken from an unlocked room.
  • Be careful with documents that contain personal information. Shred bills, and keep credit card and bank account statements stored in a safe, locked location.
  • Leave your Social Security card and birth certificate at home, with your parents. You’ll need your SSN constantly in college, so you should have the number memorized. Be careful about how you use it and who you give it to; they should have a legitimate need for it. Only carry with you the ID that you actually need, like your driver’s license and student ID card. Never loan those items to a friend, no matter how close you think you are.
  • Be wary about who you allow in your room. Remember, anyone who enters your living space could gain access to your personal information.
  • Be careful what you share on social media. Never expose personal information such as your date of birth, home address, phone number and unique information like your mother’s maiden name which is often used for authentication.
  • When making online purchases, only do business with websites that have the security lock symbol. The symbol indicates the website has taken measures to protect customers’ information.
  • Never complete a credit card application at a table or booth on campus. Instead, go through the credit card company’s secure website or contact your bank before you go to school.
  • Monitor your accounts and credit report regularly. Not only will regular monitoring help you identify possible occurrences of identity theft, it can help you better understand how the financial decisions you make affect your credit score.

With some preventative steps and prudent caution, college students can ensure identity theft is one thing they don’t learn about the hard way.

 

About the Author:

Today’s guest article comes from Experian. To learn more about identity theft and how identity protection services can help your parents, visit www.Experian.com

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4 Ways to Create a College-friendly Budget

4 Ways to Create a College-friendly Budget

Being a college student can be financially stressful, to put it lightly. Not only are you likely already in debt, but it seems like you never have enough money for your day to day life. One of the reasons it can seem that way is because keeping track of your spending and where your money is going can be difficult.

Creating a budget in college may not sound like the most glamorous or fun thing to do, but not only will it help you keep track of you money, it will also help you spend less and save up. Here are a few tips for getting started:

1. Digitize Your Money

Cash may seem like the way to go, but how often do you lose, misplace or just ignore your small bills and coins? If you digitize your money, e.g. paying using your debit card, you can track every cent and have a log of what you spent your money on without having to do it yourself. Stocking up on change might seem like a good idea, but coin machines often charge a large amount of money to convert to bills, which makes it not worth the trouble unless you have hundreds of dollars in change.

Think about getting a phone with mobile pay to make digitizing your money even easier. For example, the iPhone 6s features Apple Pay which uses Touch ID to verify a purchase made on your phone, so it’s safer than ever before.

2. Start Setting Savings Goals

Online apps and banks, like Simple.com, let you set goals on your phone to further facilitate saving. Whether your want to save up for something specific or for a rainy day, setting a few bucks on the side is never a bad idea and can help prepare you for big-time savings that will come after college.

3. Cut Out the Non-Essentials

This is the hard part. The easiest way to save money when budgeting is to take a hard look at what you’re already spending your money on and cut out the things that you don’t absolutely need.

If you have a gym membership that you haven’t used in a few months, you should probably cancel it and save yourself that money. Instead of eating out once a day, try cooking more often and eating out only once a week. If you’re spending large amounts of money on online gaming, you should probably skip a few hours a day and study anyway. Double incentive.

4. Set Money Aside for the Things You Really Need

Think about how much money you need for your essentials that will last you until your next paycheck and set that money aside as soon as you get paid. When you start budgeting for stuff like food, the easiest way to figure out how much money to set aside is to go grocery shopping with a list of all the things you’ll need for a week. Go to the store, buy your stuff and make note of how much you spend. Now all you have to do is budget accordingly.

You can also budget for future events or purchases by setting money aside beforehand so you don’t have to spend an entire paycheck on something like the gift you forgot to buy for your best friend’s wedding.

College is a trying time. You feel like an adult, but at the same time feel like there are so many things your parents forgot to tell you about adulthood. Hopefully, you now have one less adult thing to worry about.

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A Student’s Guide to Adulting: 4 Tips to Save Cash During Your Move

A Student’s Guide to Adulting: 4 Tips to Save Cash During Your Move

Whether you are a recent college grad starting out on your own or a student transferring to a larger school, moving to a big city can be overwhelming. Not only do you have to cope with the stress of leaving all that is familiar behind, but you also have to deal with the arduous and expensive task of moving to an ultra-urban area. Don’t let your first time living in a bustling metropolis break your spirit and your bank. You are on your way to bigger and better things, and with a few tips and a little planning, you will reach your new home with high spirits and a few bucks left in the bank. Here are four tips that can help you save money while moving:

Lighten Your Load

Sell anything you can do without. As you pack, set aside non-essentials that you may have accumulated over the years. Anything you have not used in the past year is eligible for the chopping block. This goes for clothing, books, CDs, smaller belongings and under-utilized furniture. Furniture will be the most difficult and expensive items to move, so if you can ditch the second-hand sofa that’s been serving as a hamper for the past year, do it.

Post items on Craigslist or host a yard sale to help you downsize and earn enough money to purchase a new futon when you arrive in your new city. The less you have to drag along with you, the easier your move will be.

Haul It, Don’t Store It

Storage facility costs add up quickly, so if there is any way to avoid renting a place just for your stuff, go that route. Rental truck companies charge based on the size of the truck, so if you have sufficiently downsized, you’ll already be saving money. Many rental places also offer deals during the slow season in winter months, so timing your move appropriately could also save you some cash.

Do It Yourself

Hiring a moving company to come in and do all the heavy lifting for you is a fantastic luxury, but also likely one you cannot afford. It’s difficult work and it shows in the price. Consider what is manageable on your own, and enlist the assistance of friends for the rest. This is the perfect time to call in some favors, or offer to bribe them with food and drinks. If you combine your moving day with your bon voyage party, you could say your goodbyes while soliciting help with the loading. If you are moving to a nearby city, load up your friends’ cars and have a tailgate party from your old pad to your new one.

Get Help Online

Moving to a big city might mean you won’t be able to do a walk-through of an apartment on your own, but there are online search tools that can help you when you’re looking for apartments in mega-cities like NYC. Particularly in areas like this, square-footage is worth its weight in gold, so give yourself time to research and find the apartment that’s right for you.

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Creating a College Budget: How to Save and Cut Costs

Creating a College Budget: How to Save and Cut Costs

collegebudgetpigNo money and no time to make money may be the hardest college equation you’re asked to solve in the next four years. How are you supposed to pay for tuition, living expenses, entertainment, travel and more when you’re in class, studying for exams, or trying to find and complete an internship? It’s hard, but it can be done.

Indeed, the best way for college students to make money is to save the money they have already earned — whether from part-time jobs or student loans — by practicing smart spending habits and using student discounts. Here are a few tips to help you get started.

Choose a Money Management Tool

Whether it’s pen and paper, a simple spreadsheet or an app, you must come up with a way to track your spending. Mint, a free app, helps you create a customized budget, track your spending, pay your bills, and even learn about how to improve your credit score. When creating your budget, set goals for your spending, but be realistic. If you’re a foodie, don’t cut eating out completely — just limit yourself to a certain dollar amount each month. The same goes for gamers, sports enthusiasts, shopaholics and adventurers. To save money and stick to your budget, you don’t have to live a boring life — you just have to plan ahead.

Save and Splurge

When money management is on the mind, every activity, cup of coffee and weekend get together all of a sudden looks like dollar signs to you. These things, as well as fixed costs and unexpected expenses, are part of life. Figure out a balance of when to save and when to splurge — and recognize when doing either will benefit or break your budget in the future.

When it comes to insurance, for example, you don’t want to skimp now and then find yourself paying big bills later. The same goes for car maintenance. If you can avoid choosing cheap repair options now, they won’t keep popping up in the future. So, the next time your car gets a blowout, see it as an opportunity to invest in high-quality tires, which will save you money in the long run.

Discounts: Use, Don’t Abuse

Whether they advertise it or not, tons of businesses offer student discounts if you just ask. From technology and travel to entertainment, food and clothing, simply flashing your college ID can save you anywhere from 5 percent to 25 percent at many retail stores. For example:

  • If you join or renew as a Sam’s Savings member, you’ll receive a $15 gift card with your student ID. In addition to groceries, varying Sam’s Club locations also offer members-only discounts on tire service, an optical center, pharmacy and more.
  • Students can earn discounts on Adobe Creative Cloud by choosing between the All Apps plan (giving you access to the latest versions of every Adobe creative tool) or Photography plan (which includes Photoshop and Lightroom).
  • The Student Advantage Discount Card from Greyhound will save you 20 percent on walk-up fares and online tickets. It also saves you 40 percent on package shipments sent through the company’s Package Express offering.

While these are all awesome discounts, remember, there’s a reason businesses offer student discounts: It’s because students usually don’t have a lot of money to spend. Don’t let yourself jump on the “But it’s such a good deal!” train. The key to saving money with coupons or student discounts is to only use them on products and services you already planned to buy.

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Use the 5 Love Languages to Date in College on the Cheap

Use the 5 Love Languages to Date in College on the Cheap

Young Couple at College

You don’t have to drop $100 on dinner to woo your college crush. Some women prefer quality time with their beau over pricey gifts. In Gary Chapman’s book “The Five Languages of Love,” he explains how to foster a healthy relationship by recognizing what exactly makes your significant other swoon. While one person might appreciate a love letter, another might prefer a night alone together cuddling under the stars.

If you can tap into your partner’s love language — words of affirmation, quality time, acts of service, physical touch and receiving gifts — you can better plan a date that takes not only her needs into account but your budget as well. Here are some tips to dating in college without breaking the bank based on the five love languages.

Words

Words of affirmation is sometimes the hardest love language of all. You may not have reached the “I love you” phase, but everyday compliments can be just as powerful. The most financially sound gesture of all, verbal terms of endearment provide a feeling of warmth to the recipient.

Date ideas:

  • Create a mixed playlist with specially chosen songs for her. Pack a picnic, go to the park and listen to the “mixed tape” together.
  • Plan a scavenger hunt with little sticky notes about what you like about your date at each location.

Time

Make your date feel like the only man in the world by giving him uninterrupted quality time. Put your phone away and offer your undivided attention. If this is your beau’s love language, he prefers experiences over tangibles.

Date ideas:

  • Take in one of your college team’s sporting events together and give it your full attention. Cheer, eat a hot dog and laugh together. No texting!
  • Have a board game night.
  • Take a road trip together (this might be the ideal time to pop in that playlist you created).

Service

While the phrase “acts of service” may seem a little archaic, it really is just about being kind. What can you do to make her life easier?

Date ideas:

  • Cook her dinner. This includes going to the grocery store, setting the table and cleaning the dishes afterward.
  • Wash her car together. It may not initially seem like a fun date idea, but water, sponges, soap and your little lady could turn into the best water fight you’ve ever had.

Touch

Even if you’re not a touchy-feely kind of person, if your mate’s love language is physical touch then you have to find a way to show them affection. Whether you snuggle during a movie or take her hand while strolling through a farmer’s market, physical touch is free and can make a world of difference.

Date Ideas:

  • Dance together. You can hit the club to get funky or dim the lights and pop in some Frank Sinatra at home for romance.
  • Trade massages. Enough said.
  • Tour your city’s downtown hand-in-hand.

Gifts

Even though you are trying to save money, it might be necessary to show your affection with gifts. They don’t have to be fancy, expensive gifts; it’s the gesture alone that counts. Be thoughtful in your efforts and give gifts that align with your partner’s interests.

Date ideas:

  • Go to the farmer’s market and buy her that organic honey she’s been raving about.
  • Gift her a date night like a cooking class or a paint and wine night.

No matter what you are doing together that night, begin her day with a special flower delivery to let her know you are excited and thinking of her. A reasonably priced floral arrangement catered to her flower preference is always a safe bet.

Save money when dating in college by using your partner’s love language for a guaranteed good time.

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