A lot has been said about millennials (born after 80s). The Me Me Generation, narcissistic idiots, who still live with their parents, is in bad debt, with no job security whatsoever. We have been categorized as ‘narcissistic’, ‘lazy’, ‘entitled’, at the same time ‘opportunistic’, ‘entrepreneurial’ and ‘idealistic’ on the same pedestal. Amongst all the things we are labeled as, most profoundly common trait is- we are a generation of dreamers. We dream big. Our dreams fall in that zone of iridescent success/utopia that most times they lose touch with reality. Our expectations from life and career are immense. That’s the reason many analysts fear that millennials are going to be hit hard as reality strikes them. As they move further in life, likelihoods are high that they will have a lot of unmet expectations. According to forecasters, the crisis of unmet expectations will befall us at least once in our lifetimes!
Are millennials really about thinking big and doing less? And most important, Is there a disconnect between us and our financial management?
Are we prepared for the world we are living in or having numerous options for everything- from deserts and people we want to date to varied routes to success, have ruined our sense of reality?
Dreams are good. They keep us going. But they shouldn’t keep us in a state of inebriation. Reality should well be a part of our dream. From that perspective millennials are vulnerable. There is a need to define a clear path towards financial freedom. Just dreaming about success won’t do. It depends upon us whether we are going to pave the way for a real-time secure financial future or will we keep ourselves intoxicated in our dreamland.
This month’s millennial finance will unravel the disconnect between our financial dreams and ground realities and will suggest measures to sail our dreams in the right direction. Let’s learn how we can make our dreams, our biggest financial strength instead of weakness.
The Dreamers: OCD of Switching Jobs
A 28 year old friend of mine, recently enlightened about her financial health told me how she quit 5 jobs and 3 different career paths to finally realize her constantly ruining financial condition which made her give a proper thought to her life goals. Now she is happy finally settling as hair and make-up artist, she has long-term plans to grow in the same field and she has also started to manage her finances well.
The veracity of our dreams and loss of touch from reality is evident in our constant OCD of switching jobs. Gaining new experiences isn’t bad, but it shouldn’t come at the cost of being financially irresponsible. Dreams are good as long as they don’t prove detrimental to future. Problem is not dreaming; problem is not having a constant dream. We are a generation too obsessed with instant gratification. Millennials dream so unrealistically because nothing seems impossible to us. We come of an era marked with freedom, no world wars, stability, urbanization, globalization, and king of all, internet. Bluntly stating, we don’t know much about uncertainties.
Statistics show that millennials are severely debt-laden, underemployed and live paycheck to paycheck. We dream of having a separate vacation house, home theatre, swimming pool on terrace, but we don’t do what is required for these aspirations. Student loans, auto loans, home loans, have already gripped us tight.
It is not to say that millennials are not well-educated or conscious about their present situation, but they don’t seem to do much about it. As per reports, 90% of millennials think that it’s important to save regularly, but more than 39% don’t do any savings (for emergency/investment purposes). And 43% don’t even use a budget to manage savings and spending, instead more than 90% say they would prefer to take up a menial part-time job over budgeting. Baby! No pain, No gains.
The other side of the coin
No! I am not seeking a silver lining here. There truly is another side to Me Generation. We are open-minded, entrepreneurial and financially conscious, unlike Gen Y and Gen X.
Enough ink has been spilled over our dismal financial situation and our bad financial management, but there is more to the picture. We know the importance of managing finances, but given our unique financial position, we are not aware of the ‘how-to’ part of it. I say unique financial position, because none of the previous generations were this ambitious, debt-ridden and open to new education, at such an early age.
Social media insights show that about half of financial conversations online are driven by millennials, generating more than 6.5 million posts, likes, shares and comments each month. Why this is not reflected in our attitudes, is something to be pondered upon.
Though there is disconnect between our savings and seemingly good financial knowledge, millennials are heavily cutting down on big-ticket lifestyle to back their lofty dreams. But sadly so, this idea isn’t completely working out. The money they save by trade-offs and not pursuing a rich guy’s lifestyle (owning cars, big homes, branded clothes, using credit instead of debit card) is all going towards paying off debts instead of contributing to savings.
Are Millennials doing enough to become financially secure?
They have the aptitude, but lack in attitude towards becoming financially smart and secure. Their hearts might be in the right place, they might be gaining information about being financially independent, but it would continue to be hogwash until it translates into our actions.
Failing to save systematically can be really harmful in long-run for our generation, since we are losing on compounding benefits. Similarly, giving no importance to budgeting is another financial sin you are committing.
We tend to fulfill our bellies with dreams and working hard to earn money. But we are losing on the smart work which is needed in our financial situation. Dream demands planning. Do you have a plan in place?
Some Financial Tips for My Millennial Generation
- Have a monthly savings plan. No matter how inconvenient savings seem along with burdensome debts, building savings is most important for millennials. It is a financial strength they will realize with time. Save at least 3% of your annual income. Remember, if saving is a habit, failing to save is too.
- Save and then invest your savings in diversified investment tools. When you save and invest from an early age, the power of compounding becomes yours. You are in for amazing long-term returns. For example, if you invested INR50000 in apple stocks in Dec. 1980, it would have grown to INR1.43cr. by today, giving an annual return of 16.75%.
- Don’t shy away from budgeting and lose sight of numbers. Budgeting is no out of date, traditional financial custom. It is still very relevant and will remain so in future. For start, make a relaxed budgetary plan of income, spending and savings.
I strongly believe it’s about making your weakness your greatest strength. Our generation is debt-ridden at an early age, yet we dream. Our dreams give us the vision to see an ideal future and the potential to make it happen. All you have to do is connect with your financial groundings and make it a part of your lifestyle.
Give our unique financial position the right attitude. We can redefine what financial freedom means. Remember, a generation’s greatness isn’t determined by the data, but how they react to the challenges they face.
