Millennials and their (lack of) finances
Most millennials are advocates of change, leading personal movements or working towards securing a better world for coming generations. Having said that, the majority don’t seem to be doing much about securing their financial future. For a lot of young people today, the prospect of being a house owner is almost laughable. Previous generations believed owning a house was the sensible choice not just for the security it provided, but also as an investment for the future. Things have been considerably harder for millennials. Not only have housing prices increased, but young millennials are entering their working years in debt. They are not only facing higher student loans, but spending more than the previous generations.
What can young people do today to prepare
Have a crisis fund
Saving money doesn’t exactly come easily to the new generation. A survey revealed that the majority of young millennials have under $1000 in savings, and many don’t even have a savings account. Losing your job is the biggest risk during a financial crisis. It is wise to save towards having an emergency fund that covers you for a minimum of three months until you get back on your feet. No matter how low your earnings are, making a habit of saving 10% of every stream of income you get will eventually start building up capital for later on in your life.
Work harder
Research shows that millennials spend an average of £3000 on lifestyle treats such as coffees, shopping and going out. However, even if they limit their spendings, the prospect of affording a house is a long shot away. Saving is a requirement, but perhaps putting aside a small percentage of your income isn’t going to get you very far. Getting a second job or picking up small gigs to earn some extra money will certainly make saving substantially easier.
Shorting the market
A lot of young people today are hesitant about investing in the stock market due to entering their adult life witnessing the last financial crash. Financial crises are inevitable, and if you are convinced that the stock market might sink in the next coming years, you can short it and produce a profit by using exchange-traded funds (ETFs). They are more suitable for younger people that have time to build their wealth and take more risks. Just like any type of investment, taking time to do your research about the best ETFs is paramount.
Save smart, spend smart
Millennials are facing a very different reality to those of earlier generations. Our financial struggles come from society’s constant demand for more and the “new”. As a consequence, we live in a day and age where it’s easier to find yourself in debt, than it is to save. However, Millennials have to realize that their financial security is in their hands. It may be harder than before, but it is up to them to start taking steps towards saving for emergencies, and equally to be able to live the lifestyle of their choice. It’s not just about saving smart, but also spending smart, and taking both into consideration will secure a more stable future for younger generations.
