Millennials and Finance: Make a Plan and Stick With it

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When it comes to paying off your credit cards, remember that your income and total debt don’t really make a difference in your ability to do so. Rather, planning is the key to your success.

According to a study done of more than 520 customers, the single most accurate indicator of their ability to pay down their debt was the plan they put in place and their ability to stick to it. After they signed up for ReadyForZero, the customers made a plan on the total reduction that they wished to make on their debt every month. However, the American consumers have got a long way to go as the Americans collectively owe a mammoth amount, that of $1 trillion in the form of credit card debt.

People still give more priority to their short term wants

Even after the consumers were provided with such improved odds, they still fell short of achieving their goals. On average, every individual was just able to reduce their debt by 25-30% of the dollars that they planned to pay off. It was seen that the consumers got impatient and they wished to fulfill their short-term goals so they gave them more priority over paying off their debts. If you ask about this to the behavioral economists, they will name this as a present bias which included giving more priority to short-term wants rather than on long-term wants.

This is not the first study that concluded that the commitment to repay debt is a vital ingredient in debt pay off. The majority of the people are more likely to pay off their credit card bills when they get a call where an automated voice asks them to commit themselves to pay back the debt within a short time span, like 24-72 hours. This was found out by the researchers who studied this in the Boston University’s Questrom School of Business.

Millennial women are lagging behind men with their finances

Both the millennial men and women are gradually giving more priority to their family and household but there is a sharp difference in the way in which they plan to achieve such a goal. Men usually tend to give more value to money and they are given more pressure about offering money to the family. For women, it’s often just about flexibility and time. Their long-term goal is to have that balance between their family responsibilities and their passion or career.

One more divide for women and men is parenthood. More than half of the millennial parents are of the opinion that having kids has got a positive impact on the advancement of their career. This half is mostly the male generation. It is not that having kids will always have a positive impact as 25% of the female millennials reported that their career advancements were halted due to the fact that they had kids.

Therefore, as the American consumers are all drowning in debt in all forms, it is high time that they take up immediate actions to bid goodbye to debt and live debt-free.