Money habits of Millennials are often talked about – it is a fun age group to talk about. Officially, a Millennial is classified as someone who reaches young adulthood around the year 2000. Although there are no formal years that define if you’re an actual Millennial, many people just say people born in the early 80’s to mid 90’s are Millennials.
Let’s be realistic, the term Millennials is just a sexy way of saying young people. It’s a demographic people love to talk about and everyone seems to have an opinion. So why is everyone obsessed with the money habits of Millennials? People want to know what the future generation (err current?) are doing with their finances.
I’m not quoting any statistics in this piece, in fact, I’m just going to use my own casual observations. If you don’t agree with me or have a different opinion, please leave a comment.
As a Millennial in the upper age bracket, my priorities have changed as I’ve gotten older. When I was in my early 20’s, I was no different than anyone else, I spent money because it felt good. As I got older, I realized saving was more important. I believe that most people have a similar approach to me, but they underestimate how much they actually need to save.
I would imagine spending overall is still a problem, but that’s probably due to the technology available to us these days. My parents didn’t have any gadgets to buy, but cell phones became pretty common in my teenage years. These days, phones and computers are much more expensive, but are pretty much a necessity. So are Millennials spending more? Probably.
I honestly believe that Millennials are doing a lot better at investing these days compared to generations past. The reason I believe this is because of the changes to the investment industry (CRM2). Fees have become a major issue in the last few years, and many people are becoming much more aware of what fees are costing them.
CRM2 combined with FinTech companies have created a perfect opportunity for investors. These days through robo-advisors you can get access to low-cost professional portfolio regardless of how much you have to invest. Some Millennials have realized that mutual funds are a thing of the past and that robo-advisors are one of the best alternatives – at least I think they have. Robo-advisors, what do you think?
Online banks have also helped changed the ways Millennials save. Tangerine, PC Financial, and EQ Bank all offer rates better than traditional banks which is a start when you’re trying to get people to save. This increased competition is great for consumers since they can “shop around” – sort of.
Fear of missing out
Unfortunately, not all money habits of Millennials are great. Fear of missing out or FOMO is the new keeping up with the Joneses. With social media these days, everyone sees their friends doing great things and they naturally wish they were doing the same.
Some people make the mistake and end up buying or doing whatever they want by instantly charging things to their credit cards. Credit use among Millennials is at an all-time high which could be a problem. Don’t get me wrong, I think people should get a credit card at a young age but they need to be used responsibly.
It’s also not fair to blame just Millennials for FOMO. I think it affects everyone, but the key is to not act on our impulses.
Millennials and younger people in general face unique challenges the previous generations never had to deal with. Who knows what will happen, so if you’re a Millennial, be sure to educate yourself. If you’re older and have no idea what’s going on with Millennials, don’t worry, you’re not alone – some of us haven’t figured it out either.