Financial Health & Wellness

Why Millennials Don't Need to Fear Debt

By MassMutual@Work

For many Millennials, debt is just a part of life. In fact, if you’re a young professional or recent college graduate between the ages of 22 and 34, otherwise known as the “Millennial” generation, there’s a good chance you may feel overwhelmed by the various kinds of money you owe, from credit cards to student loans. You may even think you don’t have enough left to save for milestones like retirement.

Luckily, with the right approach, debt doesn’t need to be a burden, and you can still take steps to reach your financial goals. So what’s the key to success? It starts with figuring out where you stand and educating yourself on savings and investment options.

Get on Top of Your Finances

For Millennials, the path to a secure financial future begins with a dreaded but equally imperative task: setting a budget. Online tools like makes it easy, whether you’re on your desktop, tablet, or phone. After you’ve covered day-to-day expenses, consider stashing away three to six months’ worth of expenses in cash in an emergency fund such as a savings account.

After that, you can start to figure out how much you can put toward your debt. Although you may not think of paying down your debt as an investment, it is—and, it’s actually a relatively safe one, because it prevents interest from continuing to add up.

When prioritizing which debts to pay first, it’s important to take into account interest rate. Find out which of your debts have the highest interest rates, then attack those first. Another common strategy is to pay off your smallest debt first, and then work your way up to the larger ones. It’s also good to consider exceeding your minimum payments and avoiding late payments.

And although you will never find yourself saying “Gee, I’m so glad I’m in debt,” it’s also important to remember not all debt is necessarily “bad.” Sure, it’s true that “bad debts” such as credit cards or auto loans can tether you to past purchases by draining your pockets. But “good debts” such as student loans or mortgages, for example, can serve as investments that offer a return over the long run. They can also help you establish a good credit rating, which is critical for everything from buying a home to obtaining insurance.

Saving and Investing Your Money

When you are ready to invest your money, how you decide to do it will depend on considerations like your risk tolerance, your financial goals, and how much you have saved.

If you haven’t yet opened a retirement savings account such as a 401(k) for example, you might consider starting one. That’s because the younger you are when you start saving for retirement, the more time your money will have to grow. Other major expenses, such as buying a home, planning for a child’s education, or taking care of aging parents, may require you to set aside more money.

Despite debt or and financial challenges, the good news for Millennials that is that because of your age, time is on your side. If you start making small, positive steps with each new paycheck, you can make tangible progress toward securing your financial future.

Keeping Up With Life Changes

It’s important to remember how quickly life can change between the ages of 22 and 34. Just like everything else in your life, from your address to your hairstyle, how you allocate your money may change over the years, too. Remember to take a look at your financial strategy with each milestone you achieve—whether you get promoted, you get married, or you have a baby.

The key for millennials is that the sooner you take time to assess your finances and the better you keep up as your life changes, the quicker you may realize there’s no real reason to fear that dreaded “d” word.