Saturday, April 9, 2016

Surprisingly Good News About Millennials and Money

News media, marketers and policymakers alike are fixated on millennials. Marketers want to make money off of them, of course, but many observers with less mercenary motives worry about the present and future well being of this vibrant young generation. Though there are legitimate reasons to be concerned, the picture isn’t completely bleak, and there are ways that even the most cash-strapped millennials can create a better life, particularly if those who aren’t saving enough – but could conceivably save more – develop better money habits.

It isn’t just millennials who are having a difficult time justifying saving, much less actually doing it. With jobs still hard to find and salaries having flatlined while inflation has marched along unabashed, many people reason that they just don’t have the spare cash left after paying bills to set aside in savings. For many of these people, however, an objective look at their spending habits would probably reveal that they could put some into savings without severely impacting their lifestyle, simply by becoming conscious about economising.

In any case it often seems that millennials are hardest hit by the challenges of today’s economy, and many of them are unlikely to have any kind of safety net or cushion. With so many people – including of course millennials themselves – worrying about their future, perhaps a little perspective is in order.

Some of the news is bad

We’re not going to sugarcoat it; you don’t have to look very far to see gloomy forecasts about millennials. Recently the UK’s social mobility tsar, Alan Milburn, warned that Britain could become “permanently divided” due to intergenerational inequality, citing surveys showing that more than half of Britons believe young people will be worse off than previous generations. It would be difficult to argue against Mr. Milburn’s warning, as millennials who are just starting out in the job market are facing the elimination of many jobs, as well as housing prices that are soaring far beyond their financial reach, and skyrocketing levels of personal debt.

At the same time, there is the feeling that chancellor George Osborne has been structuring his budgets to benefit pensioners by shifting the burden of a slow economy to younger wage earners. To many people – lay people as well as economics experts – it appears that Britain’s best days might well be behind us.

But there’s reason for hope

Millennials have a reputation for being irresponsible with the money that they do have, but that reputation isn’t always deserved. In fact a report from the credit-reporting agency Experian has found that contrary to what has widely been reported, many millennials may actually be better with money than their parents. According to Experian’s survey, roughly half of the 18-to-34 age group manage to save a quarter of their earnings every month, far surpassing the saving levels of the 35-to-55-year old members that comprise Generation X and the younger baby boomers.

The millennials’ commendable level of savings is particularly noteworthy in that they don’t benefit from the proportionally higher salaries earned, the benefits, or the dramatically lower housing costs enjoyed by previous generations. Even with these economic strikes against them, the millennials seem to be disproving many of the negative expectations directed at them.

Running away from home or running away to financial independence?

Despite indicators that the millennial generation isn’t financially doomed, only the most willfully blind or persistently idealistic observer could claim that the picture is all rosy for UK millennials. But they’re a resourceful generation and some are finding ways to create a good life on the cheap. Sometimes, however, they have to run away from home to do so.

Many millennials found themselves back in their parents’ homes when the financial crisis, coupled with significant debts due to student loans among other things, left them unable to earn enough to cover even modest living expenses. That’s why they’ve earned the nickname “the boomerang generation”. That trend seems to be changing, however. The time spent back at their parents’ homes has allowed this young generation to save, as noted above. And the savings they have amassed has afforded millennials with a level of mobility far beyond that available to previous generations, even as a changing job market has heightened the advantage of moving to wherever the jobs were. As it turns out, many of these newly-energised job markets also offer much lower housing costs.

The fact that they have their whole lives ahead of them may sometimes seem like a financial burden to millennials who are worried about achieving, much less maintaining, a decent standard of living through the years. But what seems like a burden is actually a blessing, for the millennials do have both mobility and time on their side – and they can use that mobility and time to construct careers and create financial strategies that will allow them to build a more abundant life.

Share to Facebook Share to Twitter Email This Pin This

1 comment:

  1. Very interesting. I'm definitely in the good group and will be getting out of the workforce as soon as possible!