43% of Millennials Have Less Than $50 in Account Monthly — 4 Ways To Manage Debt and Save Money
Written by
Heather Altamirano
Edited by
Gary Dudak
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Many Americans are financially strained and tightening their budgets. According to a new study by Achieve, 43% of millennials have less than $50 in their primary bank account at least once per month, followed by Gen X and Gen Z (22% each) and baby boomers (13%).
Besides being low on funds, consumers are also racking up debt. According to Experian, consumer debt skyrocketed to a new high of $17.1 trillion in 2023, up 4.4% from $16.38 trillion in 2022, averaging $104,215 per household. However, the amount of debt owed varies by generation. The Experian data shows millennials (ages 27-42) owe more. With a combination of mortgages, home equity loans, credit cards, car loans and student loans, the average millennial has $125,047 in debt.
Another stunning figure is the number of people who don’t have savings. The Achieve survey revealed that 48% of respondents shared it would take a month or longer to plan for a new $250 expense, while 30% of consumers stated they have no resources to draw from in the event of a $5,000 emergency.
“For consumers living in this extreme paycheck-to-paycheck predicament, an emergency or unplanned expense can easily shift from minor inconvenience to major life disruption,” said Achieve co-founder and co-CEO Andrew Housser. “When these situations arise, consumers who turn to credit cards and other debt to get by may experience stress, anxiety and other negative effects to their well-being.”
Getting out of debt can seem impossible and overwhelming, but with discipline and determination, it can be done even on a tight budget and low income. Here are four ways to manage your debt and build your savings.
Create a Budget
The first thing to do when planning to pay off debt is to figure out how much you owe overall. Then, create a monthly budget. According to a recent Ramsey Solutions article, “When you set up your budget, you’ll see how you’ve been spending your money. Then you can start making the changes you need to get some confidence — and pay off your debt.”
Making a monthly budget might seem scary, but it doesn’t need to be. “Fortunately, the main challenge in creating a budget is simple: you make a list of all your expenses and then compare it to your income,” per Debt.org. “Think of it as a snapshot of your financial situation.”
Save Up for an Emergency
Before tackling any debt, putting some money away for emergencies is vital. Finance expert Dave Ramsey has a 7-step program to get out of debt, and he first suggests saving $1,000. “Your emergency fund will cover those unexpected life events you can’t plan for. And there are plenty of them. You don’t want to dig a deeper hole while you’re trying to work your way out of debt!”
Use the Snowball Method to Pay Off Debt
Baby Step 2 in Dave Ramsey’s money management plan is to pay off your smallest debt first, no matter the interest rates, but only after you’ve saved $1,000. “When you knock out the smallest debt first, you get motivation. When you pile that payment onto the next debt, you get momentum. Motivation plus momentum equals victory.”
Build a Bigger Emergency Savings
Now that the student loans, cars, credit cards, medical bills and personal loans are paid off, it’s time to build up your emergency savings to cover three to six months’ worth of living expenses. “This will protect you against life’s bigger surprises, like the loss of a job or your car breaking down, without slipping back into debt,” per Ramsey Solutions.
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