Millennials have unique money challenges but can take advantage of incredible wealth building opportunities.
Millennials are the generation born between years between 1981 and 1997. As the largest and most studied generation in history, Millennials are different to any other generation with different ways of viewing the world, higher entrepreneurial goals and higher levels of education. No generation in history has seen the technological advances of the Millennial, coupled with skyrocketing political, social and environmental awareness. However, Millennials also face some of the most daunting obstacles, the most interesting being the unparalleled financial obstacles they face.
Millennials have unique money challenges that include:
- Massive Student Loan Debt- The cost of college tuition has seen its biggest increase in history over the past 10 years, causing the average millennial to have at least $50,000 in student loan debt. This is a top concern for most millennials with the current level of debt at $1.4 trillion (higher than the outstanding debt on auto loans or credit cards), attracting interest rates on average of 6-7%. Experts believe that this debt figure could reach $2 trillion in the foreseeable future.
- Statistically less likely to be homeowners- with house prices being higher than ever, Millennials will continue to struggle with home affordability.
- Historically Low Wages- Low wages coupled with massive student debt means compared to other generations, Millennials are far more likely to work multiple jobs in order to meet their basic needs. This leaves little room for saving money.
A secondary issue that Millennials face and can impact them financially comes from the kind of lifestyle the majority want. Millennials have very different priorities compared to any other generation and this is causing financial disruption and inconsistency.
- Millennials are choosing to spend what money they do have on experiences, not things- preferring to spend money on experiences that make them happier in the short run rather than material possessions. This is unique to the Millennial generation and often means wise long-term material investments are overlooked.
- Millennials are getting married and having children later than any other generation- they get enjoyment and satisfaction from their jobs and many are delaying getting married and having children because of them – either because they are focused on careers or they don’t currently make enough money to afford to have a child.
- Digital nomads and entrepreneurial careers are the new norm-Many Millennials are ditching the classic 9-5 job and becoming increasingly mobile with their careers. With many using social media for income and others launching startup careers, financial stability and steady income can often be unknown.
- Same day delivery within the hour and absolute convenience are priorities-Millennials value convenience and “ease of use” and don’t mind sharing cars as Uber drivers or apartments on Airbnb, They value their time so much that accessibility is priority, however this saved time is not used for financial gain and the cost of convenience can often be high and cause more financial strain.
Without a doubt, Millennials face a high number of disadvantages which make financial well-being difficult to achieve. However, high numbers of Millennials are persevering and leveraging their unique skills to overcome these disadvantages.
Millennials can take advantage of incredible wealth building opportunities, for example:
- Start small with saving. Millennials have a longer time horizon for saving and investing money to grow and so amounts can be lower to start- with lower wages and crippling student debt, finding large amounts of money to save every month isn’t realistic. Frequent smaller contributions to start a savings account can kick off the saving habit.
- There a wide range of high-quality tools and professionals that can help support Millenial specific financial goals – for many Millennials the thought of receiving financial advice is associated with a much older and outdated generation, but that could not be further from the truth. Working with professionals that understand the unique situation of the Millennial and utilize the internet, apps and easy access, to create a Millennial-friendly plan can be the difference between being financially stable or being swamped by debt.
- Maximize technological and entrepreneurial advantages- Millennials are usually very well versed in technology. They are able to pick up skills which are much more difficult for their older co-workers to process. Need to learn Photoshop? Give them two days with a manual. Haven’t figured out how to upgrade the new software? Check in after a week. The remarkably fast technology uptake rate of Millennials is something that cannot be ignored and can be used to leverage career advancement and even online even side jobs for extra cash.
- Continue to seek experiences but don’t forget to spend wisely on certain things- seek new and thrilling experiences but in productive ways, for example, apply for a job overseas or immerse yourself in learning a new language that could improve career opportunities. Along the way don’t forget about material things completely- purchasing a first time home in the majority of cities with a 30 year fixed mortgage may be 36% cheaper than renting.