Financial challenges facing millennials.
Millennials - people born between 1981 and 1996, have been described as the first global generation and the first generation that grew up in the Internet age.
Now in
their mid-twenties to early forties they are a large part of the working
population but have grown up in a completely different environment to their
parents and now colleagues and possibly their bosses.
It got us thinking too about some of
the personal finance areas that millennials should be considering. If you or
your children are in this age bracket, you might find it interesting.
Many started their careers during the
Great Recession of 2008-9 and all that ensued. Unemployment rates were high, salary
levels were depressed and job stability was in short supply. A difficult
backdrop to their early careers. And then just as their careers were settling
down, a decade later, along came Covid-19. More job losses, reduced incomes and
uncertainty.
Millennials have managed this as best
they could. They have done further study, have been extremely resourceful and
creative in carving out new and different careers and have embraced the “gig
economy”. Making the best of a poor hand of cards.
This tough start to their careers has
had quite an impact on the personal finances of this generation, when compared
to previous generations. We see lower rates of savings, lower rates of home
ownership and families being started later. We also cannot dismiss these
challenges, thinking that they have lots of time on their side, given some have
already turned 40!
As a result, they are facing
significant financial commitments such as young families and mortgages much
later in life. This takes careful planning and close management of often
limited financial resources.
So, what should
millennials do?
There are no easy answers and of
course each person’s circumstances are unique. But the following should be
considered among financial priorities.
1. Get expert financial advice: Don’t
go it alone and try to muddle through, as every euro counts. Excellent
financial advice will help you to make the most of limited resources. Remember, look after your money so your money can look after you.
2. Keep upskilling: Millennials have
proven their resourcefulness and ability to change. The world of work is changing,
and more skills are a critical input to optimising flexible and ever-changing
careers.
3. Avoid unnecessary debt: Credit card
balances are the devil and are simply wasted money. Avoid credit cards completely
or pay them off in full – every single month.
4. Protect your income: Your family's standard of living depends on your income. You need to protect this income until they become financially dependent. Insurance products protect you in different but complementary ways, think of it like the Gardai, Fire Brigade and Ambulance. Your financial adviser can help you identify the best products for you and your family.
5. Know your investing timeframes: You
need your money working as hard for you as possible, and you need to ensure
your asset allocation matches your risk profile and investment timeframe. Be
clear about your investment goals.
6. Don’t ignore retirement planning:
Retirement may look very different for millennials, with people potentially
working later in life than their parents did. But retirement in some form will
come to all and will need to be funded. This needs to start now especially for
those in the ‘gig’ economy.
7. Consider “later in life”
challenges: Make a will, start considering estate planning and also consider
long terms care costs. As people may live longer due to better healthcare and
diets, the requirements for long term care later in life will likely increase. This
will need to be paid for, your money needs to be there to look after you.
Some of these priorities are higher
than others, and should be managed in relation to their own specific
circumstances. We help people work through these priorities, and would welcome
the opportunity to help you consider your situation.
Like health, financial wellbeing has different
challenges for each employee.
49% of millennials say that personal
finances have been a distraction at work. Financial Wellbeing needs to be a key
element of every organisation’s wellbeing strategy.
Just give us a call.
Arrange a meeting with Mind My Money
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