Growing technology and evolving mindsets have caused disparity and to some extent a wide gap between the two generations. Yes, we are talking about Millennials and Baby Boomers. Baby Boomers, born between the years 1946 – 1964, were used to traditional lifestyle while growing up and were described as ‘responsible’, ‘active’, ‘competent’ and ‘loyal to their careers’.
Whereas, Millennials, born between the years 1982 – 2004, are also known as the ‘Generation Y’. They have been labeled as ‘narcissistic’, ‘idealistic’, ‘entrepreneurial’ and ‘optimistic’. They are basically the ‘enjoy life and have fun’ generation.
Worried about their future prospects
According to a survey by the Resolution Foundation, it states that 48% of respondents think Millennials will have worse standard of life than their parents because of economic worries. Hence, Gen Y is so worried about their future prospects that many say they would have grown up when their parents were children.
With regards to finances, Millennials have a long way to go. They are prone to excessive or frivolous spending on themselves. Such proneness towards the unexpected expenditure makes it difficult to have a financial structure or plan in place to monitor the budget and cash flow. While the Baby Boomers, mostly concentrated on compounding interest and tax savings, the Gen Y is focused on ‘how will this make me happy and freer to do things that I want to do’.
Handling and managing money can be a full-time job for anybody. With newer challenges, a substantial gap between real financial literacy and financial confidence has been witnessed with the Millennials.
Challenges faced by the Millennials
While the previous generation had ample time for financial planning, this generation gets distracted with many frivolous things. Millennials are occupied with juggling multiple jobs to pay for their student loans, saving for retirement and maintaining relationships.
Moreover, this generation prefers to spend money more on experiences rather than things since experiences give them a sense of fulfillment and happiness than the materialistic things. Barring these, the major challenge for this generation is still the lack of basic personal financial knowledge. Due to these challenges, parents of Gen Y are providing more financial support to their adult children.
Overcoming these challenges:
- Create a budget: Yes, this might sound like the clichéd advice, but it is a good one. Most of the time, this generation forgets to make or plan for monthly budget which creates difficulty in understanding the difference between the available cash versus monthly expenditure. Chalk out a monthly plan and allocate the money you need to pay for your bills and pay off any loans. The rest can be saved for emergency purposes.
- Only spend on the necessary items: Since this generation is all about experiences and exploring new things, they tend to go overboard with their spending. Try to curtail your spending habits to buying only those items which are absolutely necessary. More importantly, cut the emotional spending too.
- Cut down the ‘FUN’ Fund: This generation loves to eat out, go for parties, movies and shopping spree every now and then. To reach your financial goal, one must curtail from spending money on fun and entertainment.
- Keep saving: If you have already started saving, you are definitely in the right direction. As recommended by financial advisors, start thinking of growing your savings by utilizing products like Recurring Deposits, Fixed Deposits, SIP and Mutual Funds.
- Take help from technology: Nowadays, managing money can be done with the help of an app. Download the apps which help you keep a track of your earnings and expenditures.
The previous generation did not have the opportunities that this generation is witnessing. The focus of Gen Y is more global and networked. With their smart thinking and technological savvyness they can contribute positively to the lives of the people around them and even Baby Boomers.
