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Date: 2021-05-21 16:05:04
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According to www.entrepreneur.com, the millennial generation has its virtues and shortcomings, but more often that not, they are considered financially indisciplined, frittering away their money on lattes and fastfood offerings.
Although the findings are focused on millennials in the United Kingdom, these interesting financial facts about millennials are applicable as well in urban centers in many countries around the world, including the Philippines.
Slow income growth. Data from the Institute of Fiscal Studies finds that for the first time people in their 30s are earning less than those born a decade earlier. The median annual household income has declined for those born in the early 1980s compared to those born in the 1970s. However, those who have college degrees fare better than those without one. Besides expensive lifestyle, several economic factors such as lower earnings, higher house prices and rise in rentals leave millennials financially behind.
Questionable financial literacy. Research finds that those aged 24 to 34 are the most likely to have debt among all generations. Their scores in a mock GCSE financial literacy test were lower than 16-year-olds and baby boomers. They don›t know about the benefits of investing in shares in comparison to cash, unsurprising that they have no financial plan at all.
They like to splurge. They spend their money most on daily treats, eating out, coffee, takeaways, clothes and socializing. As many as 95 percent admit being guilty of impulsive shopping, with one out of five making impulse purchases every day – with only 49 percent feeling content after the purchase, while one-third regret doing so after the purchase.
Still, they stress about money. A consistent topic of worry and stress for them, money worries them a lot for their obligations, more than they worry about their job or health. Two-thirds lose sleep over money issues. Another cause of stress is the image of successful life pictured by social media. At least 66 percent blame social pressure to accomplish certain milestones by a pre-defined age, for additional stress. The study shows the millennial generation is the most affected by money issues.
They manage to save money. Contrary to popular beliefs, millennials are avid savers. Their savings are for first-home purchase (33 percent) and vacation (30 percent) in bank savings account. Only 25 percent of millennials are investing in stocks or equity investments.
No foresight for retirement. Millennials face a shortfall of 60 percent or more, as they have limited understanding of pensions and retirement planning. They have no idea about how much income will they require during retirement.
They prefer paying for experiences rather than material possessions. Multiple pieces of research indicate that millennials prefer experiences over things, which is the primary reason behind a higher "experience spending." One survey puts traveling and seeing the world as the number one aspiration for millennials (57 percent), followed by earning a higher salary (52 percent) and buying their own houses (49 percent). A shift from materialism to experiences has fueled the growth of the experience economy over the past decade. Leisure activities involve dining out, takeaway, streaming subscriptions, cultural events, drinking at pubs and bars and sipping one's favorite coffee.
Although there are some gaps in the millennials' current financial circumstances, it is possible to address them through financial education and advisory services. They need to own their financial mistakes and commit to being better in the future. There are not any problems that a good strategy and a disciplined approach could not address.
Meanwhile, the Asian Development Bank Institute says that the financial technology (fintech) sector is revolutionizing traditional financial practices, yet little information exists on the users of these services.
In a study it made, millennials who use mobile payments are more likely to overdraw their checking accounts, use credit cards expensively, borrow through alternative financial services, and withdraw from their retirement accounts.
Even after controlling for socio-demographic factors, the results indicate that mobile payment users are more inclined to engage in behaviors that do not seem to follow good financial management practices.