Millennials – those born between 1981 and 1996, now aged 25 to 40 years old – make up the bulk of young corporate citizens, including entrepreneurs. They are in media, business process outsourcing (BPO), entertainment, banking and finance, hotels and hospitality, academe and many other industries.
Often shown living in the moment, they overlook any sort of preparation for the future, probably why 36 percent are found to have no savings at all, and only 38 percent of these young professionals or yuppies feel financially stable. The good news, however, is that 44 percent of millennials are also found to be prepared for a tight spot with savings that could cover around three months’ worth of expenses.
Notwithstanding the Covid-19 pandemic, which may have stalled the dreams and goals of this age bracket also called Generation Y, investopedia.com reveals millenial attitudes about spending, saving and investing –– financial management in short –– according to surveys it subscribes to.
“Although they have frequently been labeled as materialistic, spoiled, and saddled with a sense of entitlement, the truth is many millennials feel they will not be able to achieve material goals like finding their dream job, buying a house, or retiring until much later in their lives than their parents did,” said the world’s leading source of financial content on the web.
In its own Affluent Millennial Survey, investopedia.com notes that 46 percent of millennials say they are not saving enough money and 39 percent say they expect to be forced to work beyond retirement age.
In its analysis, millennial investment philosophy is affected by 9/11 and the market crash of 2008, resulting in the adoption of an increasingly global mindset, with factors such as social responsibility and the environment frequently playing a key role in where millennials place their money.
“Many of them are instead choosing to follow either their own instincts or go along with their peers when it comes to investment choices, and have become somewhat distrustful of the financial advice given to them by their parents or financial professionals, whom they often view as salesmen with only their own best interests at heart,” Investopedia notes.
In the US, a survey from the American Institute of Certified Public Accountants (AICPA) shows that over three-quarters or 75 percent of millennials want to have the same clothes, cars and technological gadgets as their friends and that around half of them have to use a credit card to pay for basic daily neccessities such as food and utilities. Over 25 percent of them had late payments who are dealing with bill collectors, and well over half are still receiving some form of financial aid from their parents.
The study also reveals that seven out of 10 millennials define financial stability as being able to pay all of their bills each month, with difference in money habits between the genders, where men feel more inclined to keep up with friends in terms of material good while women to be more frugal and place a higher emphasis on saving money.
Much of the pressure that they feel to conform to the financial habits of their peers comes from social media, where financial milestones such as travel, home and car or gadget purchases are routinely posted for all to see and envy.
Because of the influence of social media, plastic surgery or physical enhancement is another area where some millennials are spending their money. Injectables are becoming more popular and social media influencers frequently post before and after videos online.
Still according to Investopedia, although pay and compensation are still very important for most millennials seeking a job, it is not always the primary factor that determines the best place for them to work. They also seek autonomy, respect and being treated fairly, and thus expect employers to be able to provide these conditions in their workplace.
Access to digital information also made them much more aware of what their peers and superiors are earning as well as that they themselves are worth, and what their rights and privileges are in the workplace. They mirror their investment philosophy in that they want work that enriches not only themselves but the world around them.
In retrospect, their ability to succeed financially will depend upon many factors, including economic and political conditions and whether they can overcome the perceived sense of entitlement that much of society has branded upon them.
Tips to protect, boost income
Many millennials have been out of college just a few years ago, so their mind is far away from retirement of budgeting for the future.
Skills information and resources web provider www.skillsyouneed.com points out that although technology has made it easier for millennials to protect their money and to earn more, it has also added a layer of complication.
Tools such as online trading platforms, money-saving apps and technology-driven investments like cryptocurrency make it difficult for millennials to decide what is the right vehicle to use to protect or to grow their money.
Personal finance may be a complicated subject, but there are important things millennials can focus on as they manage their money. These are insurance, savings, debt and budgeting –– according to SkillsYouNeed.
There can be no financial planning without budgeting. It is of paramount importance to have a budget to know the amount of money being made, saved or spent. Budgeting requires a person to take income –– be it from work, gift, tips and bonuses –– then partition it into funds for different expenses. What is left over is determined for savings as these figures are used to keep spending on track.
Protect money by saving. Setting aside money for savings does not mean that a person needs to eat easy-to-cook noodles or just bananas for the rest of their life. It means making savvy choices, such as shopping at thrift stores instead of buying designer clothing or renting a less expensive apartment instead of purchasing a home outside of budget. Millennials may find it difficult to turn down an invitation out of fear of missing out. However, the sooner young people learn to say no, in a polite way, the sooner they will see financial benefits. Moderation is key, no need to be a recluse or a killjoy.
Avoid debt. Owing money is unavoidable for most people. Fear of debt has caused people to completely avoid things like credit cards. However, credit cards, when used responsibly, are a powerful tool that can help build credit for the future. The key is being smart about debt and credit. Accumulating debt by purchasing things that are not in the budget is fatal. There are several tools millennials can use, including several apps, that are designed to track spending and savings. With credit card use, make small recurring purchases each month and then pay the balance off in full. The mentality should be that if you cannot afford to pay for the purchase in full by the time the bill comes, you can’t afford to make the purchase. Never charge more than you can afford.
Protect wealth with life insurance. Married or single, parent or childless, debt-free or full of debt, a life insurance policy allows one to fulfill financial obligations. It protects loved ones from needing to cover those obligations for unforeseen occurrences like sickness and death. Insurance is the final part of any finance plan as it protects loved ones if the unfortunate were to happen.
Multiply income with stocks. Investing using reputable stock trading platforms is one of the most secure ways to multiply income over time, but only if investing wisely. It can be tricky for beginners so look for advice from trading experts to avoid mistakes that could eat up even money set aside for emergency.