Heard the saying “The older you are, the wiser you become”?
In some cases this is true. Life experience does bring knowledge.
HOWEVER the millennial generation is giving this saying a good shake when it comes to money matters.
Millennials have been labelled travel-loving, experience-seekers and mortgage dodging, yet some reports suggest that parents may have a thing or two to learn from their offspring.
- delaying marriage and starting a family
- studying longer (or starting later), and
- expected to live much longer than generations before them.
Add to this higher house prices, growing education costs and high cost of living, it’s no wonder they are treading carefully when it comes to their finances.
A recent report1 looked at the spending habits of young millennials (people born between 1981 and 1996) and shares some interesting data.
Millennials now represent:
- Almost half of our workforce (44% of all workers) and
- One out of every three dollars spent.
They are turning away from credit cards. From 2002 to 2016, the proportion of young Australians with a credit card has fallen from 58% to 41%.
Millennials are using Buy Now, Pay Later (BNPL) as an alternative to credit cards. Beware! BNPL comes with its own risks – there’s another whole article on that one matter! However our millennials seem to be managing that as well.
Millennials are better savers and budgeters than their parents
- 36% of millennials save regularly compared to just 28% of older Australians.
- 80% of millennials have a budget compared to just 67% of older Australians2
This tech savvy generation is shaping the future of lending. They want to understand their data, their credit score and are eager to be involved in their finances3.
Almost one in three millennials use online tools to track their spending and 72% do their research BEFORE they spend.
On the other hand, research by a major bank shows only 40% of millennials feel on top of their money and one in five doesn’t have savings4.
Regardless of these varying reports, there are valuable lessons to be learnt from the millennial generation.
7 millennial money savvy tips
- Reduce your reliance on credit cards
- Do your research before you spend
- Cut back on discretionary spending to save
- Use new technology to manage your finances
- Own your money situation
- Create side-hustle opportunities to accumulate additional wealth. Focus on experiences rather than spending on material goods that will date, be replaced or depreciate over time.
- We have seen some of our clients let their guard down on their money matters until it’s time to buy a home. They then find themselves disappointed with how much the banks are willing to lend them due to their credit history and spending habits.
Use these money savvy tips early on and you will find yourself in a much more favourable position when it comes time to buy.
With your best ‘interest’ in mind
Irwin Financial Solutions
PS: Remember… We are in a new financial year! If you have not already started planning your NEW FINANCIAL YEAR FINANCE SUCCESS, then jump into our diaries for a review.
1,2 How Millennials Manage Money, Facts on spending habits of young Australians
3 Australian Broker, Millennials shaping future of lending
4 ANZ bluenotes, Millennials Keeping time on their side