Just how much do millennials know about finances? Are they adept in handling their money to make the best of it? If you’re concerned with your finances, thinking you’re the only one who’s unsure of how to manage their money properly, then keep reading this article.
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Inadequate Financial Literacy
A survey showed that only 24% of 5,500 millennials respondents have basic knowledge of their finances. Compared to earlier generations, millennials are not well-educated about money and how they can fully utilize it to their advantage. Although the specific reason as to why this happened is unclear, here are some factors that affect Generation Y’s finances:
Emotions Running High
As millennials deal with many concerns involving their work, personal lives, and even the planet’s future, many rely on their emotion more than they do logic. This may be unintentional, but most millennials nowadays let their emotions get the better of them when making decisions, including those that influence their personal accounting.
For example, when investing, millennials aim to obtain the highest return, so they put their money in when the stocks are high, getting swayed over by their excitement. However, most do so without the proper understanding of how risks and returns work.
Using Future Profits Today
With profits expected in the future, millennials tend to depend on prospective earnings to justify their present spending. Even if these future profits’ existence is undetermined and debatable. An example is putting a new laptop’s expense on a credit card rather than saving up to pay it at a total price with no interest.
Millennials should not always rely on credit as unforeseen events such as medical emergencies and sudden job loss can occur. When this happens, an individual’s regular payments will be delayed, and they may incur more expenses in terms of surcharges.
Bad Financial Habits
Because social media bombard millennials’ lives, it can not be denied that some spending is directly related to boasting material success in such networks. For instance, the growth of new industries such as plastic surgeries to enhance beauty has also taken up a significant part of the millennials’ expenses.
The continuous parade of material things posted online motivates millennials to purchase items they can’t afford, or worse, don’t really need. Millennials should save at least three times their annual salary to prepare for their retirement, but because some entertain fads and philosophies of “living in the present” and not saving up for what’s to come, allocating for their future self is not a priority.
Future of Millenials
There are still many changes millennials should prepare for in the coming years. With the continuing global competition and drastic changes in the workplace and the environment, many factors will still affect the financial conditions of each individual.
Unexpected predicaments, such as the recent pandemic, considerably shifted the economy, followed by many changes and adjustments to fit the world’s needs. Everyone, not just millennials, should be ready for whatever the future may look like.
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