As the end of 2016 is approaching, most people are reviewing their To-Do lists for this past year. New Year’s resolutions are being prepared; but before we make them, we should first have a reality check. Not to underestimate the importance of other aspects of each individual's life, but the financial status of Millennials is at the top of the list to be reviewed. So let’s examine the pros and cons of the lifestyle of the largest demographic in the world from the aspect of finances. Here are the biggest mistakes that this generation is making financially, with a few tips and tricks about how to avoid them or make their consequences less severe.
Savings are small to non-existent
The generation that has seen it all – from the financial crash to the rise of individuals who have become billionaires overnight – seems to be uninterested in planning for its future financial security. Only a very small percentage of Millennials even has a savings account. According to surveys, 23 percent of the younger part of the Millennials generation, aged between 18 and 24, do not have a savings account. And the situation is quite similar with the older members of this demographic where 18 percent also do not have a savings account. So, do you see yourself in these numbers? If so, here is an easy fix. Get to the apps store and download Digit – an automatic savings app that will do the math for you and help you to invest your money wisely so you don’t have to work when you are in your 70s.
Rents are sky-high!
Now this generation is always taking it to the extreme. A large portion of Millennials are still living with their parents, and we will catch up on that issue later on, but the rest of the young adults are living on their own while spending way too much on rent. In San Francisco, according to research, young people are paying 79 percentage of their income for rent. Now this may sound like a price most of us are willing to pay for independence, but numbers don’t lie, and experts stated years ago that you shouldn’t pay more than 30 percentage of your income for housing. If you are one of the Millennials who refuse to live at home with your family there is an easy solution for your problem. Get some roommates! You can split the rent while not compromising on your location. Because we all know Millennials want their homes to be in the center of the action.
Avoiding the stock market
Let’s be real: how many Millennials do you know who are investing money in the stock market? I personally don’t know any. In the digital era it may seem a bit old-fashioned, but investments in the stock market are usually a solid ground for retirement plans. Four in five Millennials, however, are not investing or considering investments in the stock market. This demographic is more than willing to trust an app with their money, but due to the fact that multiple financial crises have occurred during their lifetimes, trust in the stock market is not high. If you are willing to take a chance and try to earn some money the old-fashioned way, make sure to check out Acorns or/and Robinhood.
That’s pretty much it. Now I am sure it is quite safe to say that most Millennials are doing great considering their age and the circumstances they are living in. It is time therefore to give you an overview of the other side – all the things Millennials do that make sense from the financial point of view. So scroll down and give yourself a tap on the shoulder if you have these habits.
Investing in education
Yes, we have heard it all before: education has never been so expensive, student loans are a burden, university degrees do not pay off. But let’s take a step back and look at the overall situation. Yes, the labour market is crowded with highly educated young people who are unemployed, but on the other hand it is evident that the youth of today have recognized the value of education. And if you say there is too much student loan debt, we agree, but most people are willing to shoulder the burden in order to provide a better future for themselves and their families. So way to go Millennials: education is a smart investment!
Owning cars is so overrated
Yes, our parents see a car as a necessity, but living in the modern world today means you have so many – and better – alternatives to car ownership. According to research, Millennials are 29 percent less likely to buy a car than generation X. Cars cost money and have to be maintained, and you have to consider the cost of parking, tickets, or other penalties you will have to pay if you don’t follow the law. When you are a Millennial and you are living in the center, you really don’t need a car and everything that comes along with it. This demographic is quit determined to use transportation services that are essentially cheap, and we couldn’t agree more with their decision.
Living at home with parents
Last but certainly not least! This is one of the major successes this generation has accomplished: breaking the stereotype that you need to move out as soon as you can and start living on your own. Now we have nothing against living on your own, but in the present day, with the cost of rent off the charts and incomes so insecure, one has to question the price of independent living. Most Millennials are willing to stay with their parents despite reaching adulthood. Their savings are increasing this way, and they are ensuring a brighter future for themselves. So congratulations, Millennials, this has been a year full of smart decisions from a financial point of view. Keep up the good work.
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