Millennials are members of the generation born between 1981 and 1996 and they are one of the “hottest” generations right now. This is mostly because they’re the most active generation when it comes to working, inventing, changing and dictating the world trends right now. They’re the ones on the center stage at the moment and it is only normal to take a closer look at them and the way they see money and personal finance.
Every generation is different and unique in its own way. The Millennials were between 5 to 20 years old when the 9/11 terrorist attacks shook the world. They entered the workforce at the height of the economic crisis and many of their actual life choices are shaped by this. Millennials had a “slow start” in the economics and it is showing. Their money habits are quite disruptive and this is showing in the whole economy of the world.
The Money Mindset of Millennials
A 2020 study by Bank of America reports that one in four millennials who are saving have at least $100,000, 16 percent more than they had in 2018 and 8 percent more than in 2015. Their money mindset can be summed up in a few ways:
- 73% of millennials are saving for future goals and personal life milestones (retirement or for an emergency fund)
- In 2019, 39% of millennials raised their credit score, 29% got a raise and 24% saved more money for retirement
- Millennials started saving for retirement much earlier than Gen X or Baby Boomers. Millennials started at age 24, compared to 30 for Gen X and 33 for Baby Boomers
- Nevertheless, 73% of millennials are not optimistic about their financial future
- 16% of millennials owe around $50,000 or more
- 90% of millennials would make sacrifices for a certain financial goal; one such sacrifice is giving up on vacations (35%)
I’d say millennials are a strange set of contradictions, fears and aspirations. They’ve almost grown up online. Studies show that they’re the generation most likely to use online banking (92%) and this is why financing companies are aligning their services to serve their needs. What’s more, they’re good at finding better and newer ways of making an extra buck. For example, working millennial moms can start online businesses of their own, like a blog affiliated to Amazon where they can share their knowledge of the best pack and play sets for children.
This proves an older 2013 research which proved that 70% of millennials believed that they way they would buy and sell things would be different in 5 years; it seems they were quite right at that time.
So, millennials save money and are worried about their retirement and financial future. You’d say those are good signs of a healthy personal finance strategy. Nevertheless, they make mistakes and here are the 3 most frequent of them.
The 3 Most Frequent Money Mistakes That Millennials Are Making
Whether you’re a millennial, Gen X or Gen Z, the very first financial education you get is from your family and parents, mostly. So, if you see your parents struggling with a firm, then you’re most likely to avoid that sort of business; or if you see them succeeding in a certain field, then you’d like to walk in their shoes. However, there are some certain mistake typologies that are recurrent throughout the Millennial generation and I’m going to discuss them here.
#1: Millennials Have a Hard Time Making a Personal Budget
Millennials weren’t really taught how to do this. This has to do with the personal education of all millennials. No school programs taught them about the importance of a personal budget and personal finance categories. This is something millennials learn the hard way, by actually writing down their goals and figuring out how much money they need for each and ever one of them.
#2: Millennials Are Too Afraid of Investing and Keep Too Much Cash on Hand
If you’re a millennial who managed to save a fair amount of money, say 300k or something like that, you shouldn’t keep them trapped in bank accounts, but rather invest them in stocks. Although much riskier, that’s the best way to establish a long-term growth. A 2018 research showed that only 37% of young Americans (not older than 35) owned stocks.
This number might say something if we compare it to the 61% of people over the age of 35 who did own stocks.
#3: Millennials Do Not Realize Their Health Is More Important Than Money
You might wonder: what does this have to do with personal finance? Well, it does…a lot. Being focused on your health and well-being will positively affect your personal finance in the future, as well. A healthy body is the best vessel for a healthy mind and the best prerequisite for a healthy personal finance lifestyle. It’s your call!