5 Millennial Money Facts That Go Against All The Rules
Millennials are the generation of young adults born in the 80s and 90s and the truth is, they often make headlines for their unique money habits and against-the-grain behaviors when it comes to living, working and saving. It’s not unusual for there to be a generation gap that causes differing priorities and a varied approach to many parts of life, and money is no exception.
These millennial money facts may seem out of the ordinary, but they seem to be more common for the millennial generation.
- Pledging allegiance to YOLO. Millennials coined the phrase “You Only Live Once” and many use their money the same way. Not only does the younger generation not make the same effort to save that older generations have, but many love to use their money to enjoy life and collect exeriences. For older generations, this is is hard to understand, because planning just seems like a no-brainer, but not to the younger generation. There is nothing wrong with letting your money help you enjoy life, but it should never be at the expense of having a solid financial plan and a focus on saving for the future. Without these things, in a financial emergency, you’ll find yourself using credit to get through it. It’s much easier to save a little bit of money with each paycheck than it is to pay off an outstanding credit card balance with interest.
- Living with debt. Many people make an effort to live within their means, stick to a budget and avoid debt. So why do millenials seem more comfortable with debt than previous generations?An article in the Wall Street Journal reported that “Not only do millennials carry debt, but they struggle with it. A majority report having too much debt, difficulty in making payments, and worries about it”. While debt may seem normal to millennials, debt is definitely not a wise way to live. A happy financial life comes from the freedom of knowing that you can do whatever you want with your own money -- instead of having to use it to pay off debt.
- Neglecting retirement savings. Less than half of millennials have retirement savings. According to a recent study by Fidelity Investments “43% (of millennials) have a 401 (k) and 23% have an IRA.” Those aren’t big numbers considering 100% of people probably want to retire someday. The “I’ll worry about it later” attitude is definitely not helpful when it comes to money. Millennials need to remember that saving even $25 per week from a young age can add up over time.
- Focusing on one goal at a time. The YOLO lifestyle not only hurts millennial’s money situation in the short term when it comes to spending, it also defers their goals in the long term. Several financial goals are attainable at the same time, the key is to set priorities and allocate more of your savings budget towards more immediate goals. This will help you save for short-term goals like a wedding or buying a home as well as long-term goals like retirement at the same time.
- Not asking for professional advice. Fidelity investments also reported that millennials don’t value the benefit of professional advice. When asked who they trust most for information on money matters, “33% of Millennials say their parents, 1 in 4 (23%) say they trust no one.”
If these millennial money facts describe your approach to managing your money, don’t worry -- there is still time to develop new habits that will set you up for better financial success.
The team at CESI is committed to helping you make wise financial decisions and to helping you understand how to get out, and stay out of debt. For a free debt analysis, contact us and find out how we can help.