The highly analyzed Millennial generation is once again setting itself apart from the generations that have come before it. This generation, encompassing individuals in their late 20s to early 40s, is amassing debt more quickly than previous ones.

The pandemic’s financial strains, soaring inflation, and rising interest rates are a few of the reasons why. Many Millennials are naturally concerned about their financial future in the face of these demands.  

Debt levels among Millennials are typically higher because many of them are still relatively young in their employment, starting families, and paying off their homes, cars, and student loans. Add this to rising housing, transportation, food, and childcare costs, and it’s understandable why many Millennials are having a difficult time saving for the future.

Living paycheck to paycheck is stressful and can feel overwhelming, but it’s vital to realize that not all debt is bad debt. In general, having student loan debt that jumpstarts higher-paying employment aids in debt reduction and improves one’s future financial outlook. In addition, mortgages are considered good debt, because you build equity in a real estate asset and favorable credit with monthly, on-time payments.  

So how do you tackle your debt? Start with making a plan. First, figure out the household’s entire take-home pay, which is the amount of money you earn after deductions like taxes, insurance, retirement contributions, etc. Compare that number to the overall monthly and annual expenses.

Once you’ve discovered how much money you have and how it flows in and out of your account, choose a method for paying down the debt. There is not a one-size fits all approach, so select one based on lifestyle and financial goals. The Avalanche method, which focuses on paying off the loans with the highest balances, is one of the popular debt reduction strategies that many employ. There’s also the Snowball method, which prioritizes paying off smaller bills before focusing on paying down bigger obligations.

Unfortunately, debt doesn’t disappear quickly unless you win the lottery, so it will take some time to pay off sizable amounts of debt. My best advice is to stay away from making impulsive purchases and set aside a portion of each paycheck to automatically go into savings. Don’t hesitate to see a financial advisor for advice and to make sure your plan is in line with your long-term financial goals.

Despite the fact that Millennials are infamous for starting trends, this one can be reversed. Recognize your spending triggers, create a strategy, and make every effort to follow it.

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