The term “millennial” is used to define an individual born between the years 1981 and 1996, according to Pew Research. This generation makes up 46% of the country’s workforce and contributes 70% of the national household income, making them a key factor in spurring economic growth.
The trend among the millennial generation is to spend rather than save. Long term savings take the back seat in favor of near term spending objectives. Indulging in near term experiences is more important than, say, saving up for retirement. One of the reasons why millennial’s spend so much is their higher disposable incomes and lower responsibilities. Many of these individuals are just starting their careers, belong to an urban background and have a good educational qualification to get a decent salary. This brings a sense of freedom to spend the money that they themselves have earned and not having to ask or tell anyone about their spending.
Debt Laden Generation
We live in an age enabled by technology, and millennial are the primary target market and most frequent consumers of it. In this age, financial transactions have become, and are still by the day becoming, easier. Paying for things is a click away, be it your groceries or an expensive smartphone. Through this convenience, it is even easier to get into debt. Primary example of getting into debts easily is through credit cards and no-cost EMI’s. A lot of consumer products which are expensive are sold through no-cost EMI options these days and have become gettable to the younger generation through such options.
However, these aren’t the only debts that millennial’s face. In addition, a lot of the millennial are also entrapped in student loans and have to face the loan repayments for a few years after they start their careers. What this means is that other major goals such as saving for retirement, starting a family, buying a house, become secondary to paying off the loans as well as being able to fulfill their wants and needs at the same time.
New Generation Advice to be financially savvy:
Be Done with Debt as Soon as Possible
Student loans may take anywhere between 5 to 10 years to be paid off. That is quite a long time to be in debt especially at a young age where your productivity is at its peak. Instead of letting that debt hang around, try actively getting rid of it through facilities such as pre-payments. Avoid getting into small debts through credit card, late payments and purchasing items on EMI’s, no matter how attractive the offer may seem.
Try Saving Monthly by Starting Small
It is quite unlikely that you will have the same amount of money spent on your wants every month, over and above your needs. Try actively monitoring how much you spend additional to fulfilling your needs and check how much of it you can save. You could probably invest in a short term scheme and think of using that money to purchase that next smartphone some time later, instead of getting into debt right now and paying EMI’s. A budget should help in making your life easier by tracking your expenses and liabilities per month, against your income. If nothing else, it will help you build an emergency fund that can be used in uncertain times so that you don’t have to compromise on your needs.
Spend Within Your Means
In order to live a financially comfortable life, it is necessary to maintain all your cash outflows within the monthly income. Use things such as credit cards only for emergencies and try putting items which are absolutely necessary first followed by the rest. Try avoiding unnecessary loans and focus on savings and investments instead.