This Week in Your Wallet: Thin Files, Financial BFFs & Fall Sticker Shock
On average, how many credit cards do you think millennials have in their wallets? One, three, five? With recent surveys showing the generation favoring plastic for even small purchases of less than $5, you’d think the answer might be quite a few. Surprisingly, it’s closer to none. According to a new Bankrate survey of more than 4,500 people, 63% of those aged 18 to 29 don’t have any credit cards in their wallets. Why? The CARD Act (which says you can’t get a card under age 21 unless you have a co-signer or income to support one) combined with a decade of credit-card horror stories. It’s not a good thing.
By not venturing into the credit card waters, millennials are setting themselves up for having what’s called a “thin file” – in other words, not enough credit to convince future lenders that they’re a risk worth taking. And it’s one of the reasons – along with student loans – that millennials have the lowest average credit scores compared to other age groups, coming in at just 628.
Another reason for their less than stellar scores? According to Bankrate, 18 to 29-year-olds, who do have cards, aren’t managing them particularly well. They’re the most likely to use their cards daily, and they’re least likely to pay their balances in full at the end of the billing cycle. So what do you – or your millennial children – do? Check out my video on Bankrate.com to learn more.
Lending a hand, not a handout
Speaking of helping the big kids – Money recently had a piece on six ways to help your adult kids without spending a dime. According to the Pew Research Center, roughly 75 percent of parents ages 40 to 59 (with at least one grown child) say they supported an adult child in the past year. If you’re still letting your adult children make withdrawals from the bank of mom and dad – be they big ones or small ones – and you’re starting to sweat how little you might be saving for yourself because of it, then it’s time to close the account. Do this instead:
To start, share your knowledge rather than your cash. Instead of being a lender, be a financial BFF. According to the FINRA Investor Education Foundation, only 25 percent of twentysomethings were able to pass a basic, five-question financial literacy quiz. The article suggests sharing your personal money mishaps to get the conversation (and learning) going.
If they’re jobless, another way to help them – without using cash – is to make introductions. Allow your sons and daughters to enter your network. Share their job searches with people who might be able to help. At the very least, you might land them informational interviews, which can help answer questions – and even open doors. For more, head here.
Women taking the lead
One headline I was happy to see says more women are taking the lead in making personal finance decisions at home. Ameriprise Financial surveyed women (with at least $25,000 in investable assets) ages 25 to 70 and found that 56 percent partake in financial decision making with a spouse or partner. About 40 percent said they’re making money moves on their own, including 37 percent of this group that are in long-term relationships.
With age comes wisdom – the survey also shows the percent of women who believe it’s their responsibility to understand their finances is highest among older women. Over 90 percent of boomer women believe it’s up to them, compared to 84 percent of Gen X women and 80 percent of millennial. For age-specific advice on how to take the reins, head over to the full article on DailyFinance.
Fall sticker shock
On Twitter (where I’m @JeanChatzky, follow me if you’re on there too!), I shared the news that prices for some of your favorite food staples are likely on the rise. DealNews has the full list of foods to lookout for. Here, a few of them, and cheaper alternatives to keep your grocery budget in line.
Oranges. Expect higher prices for the citrus in coming months. You can blame a bacterial infection from China that causes “citrus greening” (where fruits fall off the tree before they should) for record-small crops in Florida. National Geographic reported that prices have jumped by 22.5% since May 2013, and forecasters aren’t expecting the prices to go down anytime soon. Instead of your wallets feeling the squeeze, opt for in-season fruits, like apples, pears and pumpkins.
Bacon. The higher prices for your Sunday staple still aren’t shakin’. Prices hit an all-time high of $6.11 per pound in June, according to the Bureau of Labor Statistics. Seeing this number budge will largely depend on how quickly pork producers can recover from the Porcine virus, which killed more than 10% of the total U.S. herd this year and last. Turkey bacon has never sounded so good.
Cheese. In the next few months, cheese inventories are expected to hit their lowest mark in a decade, which means we can expect higher prices. Bloomberg Businessweek says to blame bad weather in Europe and New Zealand and high feed costs – both of which hurt global milk production in 2013. DealNews offers peanut butter as an alternative. That one doesn’t do it for me (and I suspect it doesn’t do it for many of you either). I like Sargento’s thinking. The cheese maker recently rolled out packages of swiss, cheddar, etc., sliced thinner. The fact that they’re just 45 calories a piece could end up being a plus for your wallet, as well.
Have a great week,
Jean
