Each generation is defined, in part, by the way its members handle money and view personal finance.
In the US, the Great Depression shaped a generation’s thinking about money, before yielding to less conservative financial ideals. In contrast to their parents, baby boomers (born in great numbers following WWII) guided a more materialistic philosophy, centered on earning and owning – an approach that blossomed into dot.com success for many money-motivated boomers poised to clean-up on technology’s rise. But just as quickly as boomers are deemed greedy for their fiscal focus, generation X and Y have been called out for lacking motivation and direction.
Although some may be holding out judgment, it is never too early to ask: Where do millennials fall, in terms of financial values and principles? And how has the playing field changed for young people, age 20-35, charged with mastering modern money matters?
A Different Set of Expectations
Values and expectations are strong driving forces, particularly when money is concerned. Naturally, as millennials put their own spin on social interaction and employment, their financial opinions and strategies continue to evolve. As a result, members of the generation share unique views about money, when compared to some who’ve come before.
It is true; financial security means different things to different people, but some long-held values seem to have shifted for millennials. Similar attitudes about quitting work, for instance, were once shared by most members of past generations, looking forward to 65 years old as the standard retirement age. On the contrary, millennials have a flexible philosophy about retirement, expecting to work longer, in order to stretch their resources. Rather than an age, millennials are more likely to attach retirement expectations to a particular targeting savings goal.
Help is Available
More than baby boomers and members of other generations, millennials are inclined to seek financial help, when needed. Access to information contributes to the trend, but collective thinking also thrives among millennials, so consulting and collaborating represent familiar problem-solving approaches.
When it comes to important financial matters, such as home-buying, retirement, and investing inheritance, millennials consistently rely on professional help. Various influences fuel change in the way generations view personal finance, but millennials face an increasingly complex financial environment. In contrast to yesterday’s version of personal finance, which was more homogenized, today’s complicated financial products and transactions prompt millennials to defer to expert opinion. To their credit, tech-savvy millennials are smart enough to tap online resources for testimonials, tutorials and up-to-date comparisons of various financial products. Although they are comfortable using these tools to enhance their financial understanding, millennials also know when to call in expert financial advice.
Millennial lifestyles include healthy doses of social interaction, underscoring a firmly-held value shared by members of the generation. Unfortunately, leisure spending can rise beyond affordability, in some cases, leaving budgets out of balance. Student loans also weigh heavily on millennials, dragging down household budgets and making it harder for the generation to save money. Millennials send a mixed message because, beyond these two distinctions, they appear to be more committed to budgeting than members of their parents’ generation.
Like money managers from other generations, millennials are left to play the hands they are dealt. Unfortunately, in today’s uncertain times, that includes stagnant wages and rising costs of living. As a result of unsteady conditions experienced during their lifetimes, members of the millennial generation are more tentative about investing than counterparts from past generations. And their general viewpoint doesn’t count on the stability their parents enjoyed.
Despite the differences between generations, millennials share some of the same concerns recognized by their parents and grandparents. Perennially stressed-out about money, many members of the millennial generation report they are not saving enough and lack experience managing personal finances. According to one recent survey, millennials reported devoting about 3 hours to personal finance each week, with 40% feeling financially fit.
Money managers in their twenties and early-thirties face a different set of circumstances than past generations, so their approach to personal finance is unique. Although millennials spend too much money on recreation, members of the generation are tuned-in to budgeting. Faced with income uncertainty, however, young people are stressed about student loans and finding enough money to cover expenses.
As a Millennial what do you do to stay “financially fit”?