The Germans have a concept called “zeitgeist” or the spirit of the age. The philosophical concept behind this is that every era or generation has a set of animating ideas and beliefs that govern their view of the world and in turn, affects how they relate to each other and society. The zeitgeist concept is often used when talking about different generations in American society from the Greatest Generation (WWII era) to the Baby Boomers, Gen X, the millennial generation, and so forth. The millennial generation is now the largest and most influential group of consumers, and the older ones are starting to assume leadership positions. In the coming years, they will be the ones running major social, cultural, corporate, and political institutions as the torch is passed from one generation to another.
So why are they so fearful in financial situations?
Innovative Financial Group Atlanta works with those looking to overcome financial concerns by creating a plan that works well for you and your family. No matter what generation you belong to, there are ways to secure your financial future. So, let’s look at the Millennial generation.
The millennials are generally thought of as those born between the early 1980s to around the year 2000. However, there are a few caveats to consider. It is, of course, essential to remember that we are talking in very broad generalizations. Individual millennials will have wildly different life experiences, personalities, beliefs, and points of view. Nevertheless, there are some general conclusions we can draw that are broadly applicable to the millennials as a group. The events of 9/11 are usually used as a cut-off date and the defining event of this generation. The reason for this is that those born after 2000 are too young to be much impacted by 9/11. Millennials grew up in an era before the internet, and cell phones became widespread. The Great Recession, the worst economic downturn in 80 years, marred their youth. So, keeping in mind that we are generalizing and simplifying significantly, what can we say about the financial concerns of millennials?
One tendency millennials have is to spend money on experiences rather than on material possessions. For example, they may favor using Airbnb to have an exotic vacation rather than spending money on a new car. They tend to forego basic luxuries and be more cautious about spending than older generations. Rideshare services such as Uber are the quintessential millennial corporations. Rideshare services help ensure safety during a night out on the town while helping avoid the cost of car ownership and reducing their carbon footprint (the environment is a prominent topic of concern). Many millennials are experienced “side hustlers” and may work two or three jobs to have the things they want and to find meaning in their work.
Millennials are good savers and on average save over 5% of their salary. The scars left by the Great Recession have no doubt given impetus to the idea that having significant savings are essential. Recent studies show that around three-quarters of millennials are saving for retirement. The millennial age group tends to be more frugal and cautious about significant purchases. Burdensome student loan debt burdens and the rising costs of homeownership have prevented many of them from purchasing a home. Americans owe about $1.4 trillion in student loan debt, and the bulk of that belongs to millennials. Many of them also delay making significant purchases so that they can seek fulfillment and find their true self before settling down.
The average millennial carries more than $30,000 in student loan debt, and many of them worry about this to such an extent that it negatively affects their health. These high debt levels and the uncertainties attendant within the gig economy are leading to delays in starting a business, buying a home, or starting a family. Significant debt burdens will also slow the process of the millennials accumulating wealth and because of these challenges; it is possible that we will see a turn against the whole idea of a college education as a path to success for future generations. As the millennial group, ages, it is likely that concerns about rising health care costs and caring for aging parents will move to the forefront.
All of the evidence so far points to the fact that millennials are overall a hardworking and financially responsible group. They have different priorities and concerns than earlier generations did. Massive debt, lack of stable employment, rising housing costs, and fears of an uncertain future have all played their part in this situation. Some of these pressures may ease in the coming years as the Baby Boomers, and Gen X’ers begin to exit the stage and the most significant generational wealth transfer in history gets underway.
With all the information out there, we look forward to the opportunity of becoming a point of information and guidance to the millennial generation. At Innovative Financial Group Atlanta, we want to be your go-to resource for all of your financial and investment needs.