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It’s been well documented that Millennials have a slightly different view of the world than other generations, particularly when it comes to money and finances.
Baby boomers lost part of their retirement nest eggs in the recession, so money and assets are naturally very important to them, particularly to those facing a difficult retirement. But even though Millennials could be facing an even more uncertain economic future, their attitudes to money are somewhat surprising.
Here is a fresh look at how Millennials and their attitudes towards spending, investing, working, insurance, retirement, impact the way they feel about personal finance.
The most well-documented aspect of Millennials’ attitudes to money is their willingness to spend it on seemingly unnecessary things. They are heavily influenced by peer group pressure, often through social media, and compete with friends over the latest clothes, cars, phones, and electronic gadgets. The result of this seemingly frivolous spending is that many use their credit cards to pay for basic food and utilities and borrow from their parents to help them pay off debt.
The global mindset and belief in people’s power fostered by the Internet and social media has led many Millennials to view investing in a more altruistic light. Many of those who invest are making choices based not on returns, but on a company’s track record of environmental and social responsibility.
Responsible investment encourages corporate practices that promote environmental sustainability, human rights, and racial or gender diversity and avoids investments in so-called negative industries such as alcohol, tobacco, gambling, and fossil fuel production.
Many Millennials have also become distrustful of traditional financial advisors used by their Baby Boomer parents. They are focusing more on investment performance instead of commissions when choosing advice or using their familiarity with mobile and online technology to make their own investment choices.
Although Millennials want work that pays well, money is not necessarily their number one priority when choosing a job. They look for workplaces that also offer respect, fair treatment, and a good work-life balance and work that enriches them and is meaningful.
While Baby Boomers just thought themselves lucky to have jobs, it’s worth noting that many companies are now promising all these things and more to attract potential employees. After all, Millennials are now the largest generation alive and are the new workforce, now that the last of the Baby Boomers are retiring.
Due to its high cost, Millennials are increasingly turning away from private health insurance, despite the fact that they may pay an even higher price later on. According to one source, this is one of the 6 biggest money mistakes Millennials can make, as there are ongoing tax penalties for those without private cover.
In Australia, a Medicare Levy Surcharge (MLS) of 1% per annum applies if you earn above a certain income threshold and don’t have private health insurance. And if you still don’t have cover after turning 31, you’ll also pay an extra 2% under the Lifetime Health Cover loading program.
Not surprisingly, many Millennials are pessimistic about their financial futures. They worry about whether they will be able to achieve their goals such as finding their dream job, buying a home, and retiring with enough to live comfortably.
And with sometimes crippling student loan debts and high levels of unemployment following the recession, they may indeed have good reason to worry, as a time for them to build a retirement nest egg runs down.
Obviously, not all Millennials are unwise with money. There are numerous examples of financially successful Millennials including;
- Mark Zuckerberg, the billionaire creator of Facebook.
- Ben Silbermann and Evan Sharp, creators of Pinterest.
- Jessica Alba, actress, and entrepreneur.
- Mike Krieger and Kevin Systrom, creators of Instagram.
- Brian Chesky, founder of Airbnb.
- Daniel Ek, co-founder of music streaming service Spotify.
- Blake Ross, creator of the web browser Mozilla Firefox.
- Evan Spiegel and Bobby Murphy, founders of Snapchat.
- Matthew Mullenweg, creator of WordPress.
- Sean Rad, co-founder of singles app Tinder.
But whether the majority of this generation will be able to succeed financially will depend on future economic conditions and also on whether Millennials can overcome society’s not an entirely unfounded perception of them as not having the right attitude towards money.