In Defence of Millennial Money Habits
Even though millennials are often perceived as having bad money habits, recent statistics from The Guardian show that 7 out of 10 practice good saving habits, managing to put aside almost £174 on average on a monthly basis.
In fact, the majority of their hard-earned savings goes towards rent and housing deposits. When shopping for clothes, a survey from The Huffington Post found that they tend to prioritise ethical brands over fast fashion, which adds an additional premium. Going out with friends, entertainment, and self-care are other things they prioritise. However, building up savings during this current climate might be difficult for this particular generation.
Reasons for reduced household incomes
Last year’s report from the World Economic Forum found that millennials in Britain have a lower income in their 30s compared to previous generations. Usually, household incomes tend to grow with each successive generation, but not for those born in the 1980s. While older generations might blame this on their spending habits, the Institute of Fiscal Studies actually attributes this issue to a combination of factors. This includes lower than average pay, rising property prices, and lower rates of homeownership due to the recent financial crisis. To combat this, greater numbers of millennials are saving for retirement in a private pension compared to older age groups. However, building up a significant pension takes time, due to relatively low contribution levels. The current economic climate also means that job security is more tenuous than ever, making it even more difficult for millennials to put aside money for their savings.
The impact of technology on money habits
For millennials, using technology is second nature. From Apple’s new credit card to money-saving apps, increasingly sophisticated mechanisms enable them to make smarter purchasing decisions. Another innovative option is Petal Card’s app that gives ‘1% cash back right away’ on all purchases, while keeping track of your credit score. It also features an intuitive interest calculator to help millennials calculate their remaining balance. Similarly, the Cleo app features AI integration. It runs on the Facebook Messenger platform, and the chatbot is advertised as an AI friend who looks after your money. It literally speaks to younger generations, analysing their spending habits and responding with feedback that can sometimes be in the form of playful GIFs. Another interesting app that is hard to imagine older generations using is Oval Money, which can be programmed to save money for certain actions, like when you post on Facebook for instance. Evidently, appealing to this generation involves providing ease and convenience while giving your technology a personalised twist. Whatever works, right?
While millennials are busy struggling to make ends meet and saving up, they’re likely to be eagerly waiting for the pot of gold at the end of the rainbow — their inheritance. However, a BBC article on inheritance explains that many young people wrongly expect to receive nearly £130,000 from their benefactors. In contrast, the average amount handed down is only £11,000. Because of this, it’s hard to imagine what millennials will do over the coming years. Cutting down on travel and avoiding dining out at restaurants are some of the habits that they’re probably getting comfortable with. Who knows what’s next?