If there’s one generation today that is discussed at length, it’s Generation Y, more commonly known as ‘Millennials’. It’s a generation that has been thoroughly reviewed by the media and academia alike, with numerous theories around the opportunities and challenges facing this generation.
When it comes to finance, the heat has been on Millennials. Often seen as the “Now” generation, it’s often been commented on that financial management isn’t their strong point.
But is this characterisation fair?
Stereotypes are often just that
Read any media story about Millennials and it often goes something like this: They’re lazy, too focused on wanting everything ‘now’, aren’t prepared to work hard, feel entitled and are happy to lay blame for anything difficult in their lives at the feet of older generations, in particular the Baby Boomers (who are often their parents!). You’ll hear stories around topics such as housing affordability, with many commentators lamenting the ‘avocado on toast’ style of life, where frugal spending and saving your money isn’t a priority.
I won’t argue the merits between different generations (I’ll leave that to the demographers), in my view a stereotype is just that…a stereotype and I don‘t think it accurately reflects the challenges this generation faces. Housing affordability, for example, has been affected by numerous challenges, not least the global nature of property investment, that has made capital cities like Sydney and Melbourne unaffordable in many instances. That’s something that earlier generations just didn’t face.
Technology has also changed our world dramatically. Millennials are the first digital natives, i.e. those who grew up with technology as something that was commonplace in many areas of their lives. The rate of change that technology brings means that we see huge benefits, but also rapid shifts in areas such as employment, that make the jobs market more volatile for this generation.
One piece that is interesting is the view on ‘now’, i.e. that focus on living for today that is probably an area that is prevalent in Millennials. Terminology like You Only Live Once (YOLO) has become synonymous with Gen Y, almost like a rallying cry to focus on enjoying your life today without thinking about tomorrow.
Live for today, plan for tomorrow
It’s this focus that I think can be examined more thoroughly. As a financial planner, it is often assumed that our focus will be purely on tomorrow, and that’s something that has probably been a barrier in the past to this generation thinking seriously about their financial future. However, for me, you can still live for today while planning for tomorrow.
Put simply, trying to narrow your focus purely on the future isn’t incredibly fun. And you don’t want to lose out on life today just to think about tomorrow. So, in my view, it is possible to have your cake and eat it too, if Millennials follow two simple rules when thinking about their finances.
Know where your money goes
This applies to everyone but is one that affects this generation in particular. You need to understand where your money is going. Living from paycheck to paycheck isn’t conducive to long-term financial success, so having a clear understanding of what you’re spending your money on is the first pillar in any good financial strategy.
Have a plan for the future
This is where you can really live for today, while planning for tomorrow. That desire to be a little more sensible with your money can save you in the future and allow you to achieve your financial goals, whether that is buying a property, saving for a new car, or going on that life changing overseas working holiday.
It really comes down to prioritising what is important. My favourite quote is “You’ll regret the things you didn’t do instead of the things that you did”. So I absolutely believe in having your cake and eating it too. And the good news is that the Millennials are perfectly positioned to do just that; you can make that happen. It just takes a small amount of discipline.
The biggest mistake people make is leaving the planning part too late. There are options available to help you start; for example, at Apt we offer a specific planning service for Millennials looking to start the financial journey. BeApt is the perfect, online-based platform that lets you still do the things you want, while keeping an eye on tomorrow.
Hopefully, for all of you reading this the best news is…you can keep the avocado on toast!