Millennials. This is one term that we come across in social media every now and then. For the unaware, the generation that was born between the 1980’s and 2000 are termed under this category. From being in their early 30s to teens, millennials rule the roost when it comes to consumer sector. They work differently from the generations above them when it comes to spending their money or investing further on them. Let us dig a little deeper into the thought process behind their financial decisions.
The common perception about the young generation is that they are prone to taking risky decisions. How true can it be? Not really. As per a Barclays research, millennials tend to put their money into current bank accounts, more than looking for other ways to invest in it. The savings percentage differs between age groups too. Older set of millennials (aged 25-34) tend to invest more. Simple reasons like getting married, settling education loans and a steady job could lead to more savings.
Let us understand some of the driving factors behind a millennial’s spending and saving pattern:
1. Lifestyle and values that play a huge role
A common misperception is that the young generation doesn’t tend to think of the future too much. The millennial money habits survey talks about youngsters being led by social values of saving money. A lot of young people prioritise experiences over flashy material possessions. The staggering statistics is that 70% of millennials have savings accounts to their name but a huge majority has less than $5,000 in them.
The basic problems are huge amounts in the name of student loans and mediocre wages. This plays as a deterrent in millennials wanting to have a long term financial plan for themselves.
2. They aren’t as oblivious as everyone thinks
A huge majority of youngsters still stay over with their parents or depend on them for financial needs. This doesn’t mean they are unaware of the financial planning to be done. Most of them place their educational debts above and paying it off is their first concern. They look up to their parents for financial advice and in planning their future.
3. They understand the risks involved in investing
The period between 2007 and 2009 is infamous for financial meltdown and a majority of millennials came of age during this period. This in turn proves the fact that they are well aware of the risks involved with investments. A CarbonXPrint report states that they are risk averse when compared to their parents. The report further states that they prefer keeping their savings in cash and bonds than investing in stocks. The stats are at a 59% for Assets and 28% for stocks. The difference explains a lot about their investment ideas.
4. Millennials have begun their retirement savings
As bizarre and shocking it may sound, this is quite true. A staggering 70% of millennials is said to have begun their savings for retirement already. They try to begin at a much younger age than Gen X or Baby boomers. They get a great head start even if it may not be a lot every month.
5. Social Media and Technology’s undeterred role
Technology has a huge impact in every single person’s life. It’s not different with the case of millennials either. With their prospects of social security benefit’s looking bleaker every day, they are moving to other platforms for financial advise. Most of it has to do with technology and youngsters tend to read a lot on what could be good for them and not. Personal finance companies focus a lot on social media as they impart advise to millennials who are either in college or straight out of it. This way it’s easily accessible to everyone and proves to be less cumbersome with planning.
By now, we know and understand that the spending and saving habits of millennials are less simple and quite complex. It definitely isn’t going downhill and they are preparing themselves for the future. A lot of factors weigh in and keep changing as and when governments change too.
It is proven by now that Millennials are a dominant force in the marketplace and most of the companies consider them important. Simple ways to go about will be living within one’s means, set up a budget and future investments.