Millennials and Their Money – a Closer Look

A recent study by Yes Lifecycle Marketing found that 74 per cent of millennials are influenced by social media, when it comes to deciding which products to spend their money on. Given the huge popularity of social media channels, it’s easy to see why many millennials find themselves purchasing the latest gadgets and fashion, even if they cannot afford to do so.

The results of a survey by the American Institute of Certified Public Accountants showed that 75 per cent of those millennials questioned believed it was important to make the same purchases as peers, and 50 per cent of them were willing to use credit to do so. This is a generation which was hard hit by the last global financial crisis, and credit reliant spending combined with potential student debt, and finances that may have been affected by unemployment, does not make for a good recipe.


Reliance on parental assistance

Older generations saw relying on parental support in adulthood as a weakness; this is not the case with millennials. More than one-third of people in the 18-34 age group receive some financial help from parents and one in five live at home and pay a minimal amount of rent, or nothing at all. As so many of this generation are in the same position, there is no stigma invloved in living this way.

A sitting back approach

Following the financial problems that began back in 2008, many employers began using a more forceful approach with employees’ investment in their futures and pensions. Millennials have embraced the use of schemes such as 401(k)s that have automatic enrollment. They are happy to sit back and accept that employers use the installments they pay, and put them to productive use, so that they have a pension fund they can rely on.

The problem with this is that automatic enrollment often involves small amounts of investment. This means that savings are often less than those for a voluntary enrollment scheme. By sitting back, and letting someone else do the work, millennials may be underestimating how much they should actually be saving, for when they retire.


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What millenials need to do

The millennial generation has had a hard time of it financially. Many of them lost employment when the financial crisis hit, and they live in an age where marketers target them in the hope of securing their loyalty for years to come. Increased spending can lead to more debt and less likelihood of saving towards retirement years, which are unlikely to be supported by social security.

Millennials need to be more proactive with their financial planning. They need to check whether they are receiving the best possible benefits from their banking provider, and make a change if this is not the case. They should even perhaps try a credit union. This type of institution can provide a viable alternative to traditional banking.

Millennials also need to look at investment opportunities as a means of branching out on their own, away from parents, and in order to support any 401(k) investment that may be in place.

The financial future of many millennials seems to be uncertain. If they do not take action to start spending wisely, saving and investing, they could find themselves experiencing real difficulty in later life.