The financial habits of the millennials (born in the eighties and nineties) are shaped by the effects of the Great Recession, the Eurozone crisis, abysmal student loan debts and a poor job market. The millennial money habits, very expectedly, oscillate between marked conservatism in investment habits and delusional optimism. We will explain more.
The Conservative Investors
Considering the conservative side, one can draw immediate comparison between the financial tendencies of the millennials and that of those who were a part of the “Great Depression” workforce. Accenture conducted a study which actually revealed that 43% of the millennials admitted that they were conservative investors. Another study revealed that around four in ten million millennials were in favor of investing in cash.
The “Dangerous” and Hopeful Ones
On the other hand, we have the YOLO (You Only Live Once) generation which says that they don’t have any plans of spending less in 2016 though they wished they had more savings. 3 in 10 million of the millennials don’t have savings accounts as well.
The reason why the millennials cannot save is because they have crushing student loans as well as credit card loans. Post 2008, the education costs had started growing at an unprecedented rate, thereby leaving students grappling with insurmountable debts. They paid because they had grown up listening that there is no hope without a college degree. With the economy crashing, many of the younger millennials witnessed their older generation being laid off. Their parents suffered pay-cuts and unemployment. Social milestones like home ownership and marriage were delayed as there was a rush among the younger millennials to appear for the entry-level job exams like LSAT and GMAT. Needless to mention, they weren’t yet ready to take on the late twenty-somethings in these examinations.
According to a Bank of America’s Better Money Habits Millennials Report, 80% of the millennials thought that they would have a better financial future than their parents- though most of them were still living from paycheck to paycheck.
The impact of debt is so deep-rooted that there are experts who even end up thinking that debts will define this generation. The best credit card consolidation loans turn out to be a godsend for most of the borrowers in such a scenario. Debt specialists work systematically to resolve credit card debts and help customers identify flaws in their finance management techniques. However, the problem lies in the fact that debtors, mostly, land up with insurmountable debts just a few years after getting rid of their initial debts even after promising to get rid of their outrageous spending habits.
However, according to the findings of some studies, the millennials have emerged as better money managers than baby boomers. As per the survey conducted by T Rowe Price- around 75% of the millennials, thus interviewed, said that they are better with tracking their money as against the 64% percent of the baby boomers who had said the same thing. 66% of millennials also maintained that they are good at sticking to a budget as against 55% of the baby boomers.