Millennials are more likely to purchase a Starbucks coffee than their parents would. Take your own family as an example and ask yourself if this is true. Making up the nation’s largest generation, millennials have begun or are beginning to enter their prime earning years. Read on to learn how their spending patterns are different from their parents.
What kinds of things are millennials spending their money on?
- The bureau of labour statistics came out with a survey of consumer finances and found that they spend 10% of their income on food,3% on clothing and 1% on alcohol. This pattern indicates that they aren’t spending all that differently from their parent’s generation.
- Millennials spend a very minimal proportion of their expenditure on personal insurance in comparison to their parents. Within this category, millennials spend the least on pension and social security, as well as life and other personal insurance. A recent study concluded that 20% of millennials have no life insurance at all and of those who do, 70% are underinsured.
- Renters are forced to pay high rental rates and are unable to save, making it difficult for them to transition to homeowners. While incomes have not risen as fast as the generation would like, housing is becoming increasingly expensive. It might take millenials a little longer to buy houses than it took their parents. They must be guided to buy mutual funds online to build a retirement corpus, fund travel goals, enable child education and other expenses.
What are the common mistakes millennials make with their money?
- When you’re young and learning about money, it can be scary but millennials may not be saving enough for an emergency fund (liquid savings account for medical expenses or car trouble).
- Most do not have the time or urgency to grasp smart investing for their future, so learning how mutual funds work is not very common to the millennial generation. Although parents try to inculcate investing as a habit, it has still not reached popularity as they tend to live for the moment and do not worry too much about the future.
- Not saving enough for retirement.
How are millennials being smart with their money?
- Most millenials are prone to using a rational budgeting tool (50-30-20 budget): 50 on necessities, 30 on wants and 20 on savings.
- Some make investments every month and invest a small sum in different instruments depending on their financial goals. This can be done through the top-rated mutual funds offered on Finserv MARKETS where you can invest in your desired products without losing money on commissions.
What financial challenges do millennials face?
- Even if you account for inflation, there is about a 45% increase in the the cost of living since the post-recession period. When millennials entered the workforce (around the time of recession), the job market was rough. Many had student loan debts to cover. Additionally, there aren’t many starters or mid-price homes on the market. Getting an overview of the top-rated mutual funds on Finserv MARKETS is a good idea to start early investments so that asset purchases are possible in the future.
- With the rise of a variety of jobs, millennials are quick to change their careers from one role to another. This makes it difficult for a consistent and steady flow of income. This is not abnormal for millennials even though personal financial situations change.
- According to a LinkedIn study, it is common for millennials to change jobs about three times in the first five years after college. When they assess factors like personal income,student loan debt and cost of living, the idea of buying something as expensive as a house is certainly not on their minds.
Source: The Economic Times
- While millennials are comparatively more impatient and tend to live for the moment, they are quick to invest in experiences and not assets like the previous generation. This makes it difficult to save long-term. A remedy to this situation is understanding how mutual funds work. You can buy mutual funds online on Finserv MARKETS with its free and fast account opening facility.
- The median age for young Indians and millennials everywhere for the first time homebuyer has risen from 29 in the late 1970s to 33 in 2013. Some millennials joined the workforce when jobs were tough to get and raises were insufficient or non-existent. Since houses are relatively unaffordable, a lot of people are still stuck in the rental market.
- Living with parents or roommates in your 30s isn’t ideal but millennials consider this as a way to lower cost of housing significantly and enable them to cut back on debt load, thereby saving money for a down-payment. To avoid such inconveniences, millennials are advised to invest in their future and seek top-rated mutual funds to give them the best benefits. There are different investment options on Finserv MARKETS where you can make more money than a fixed deposit.
It cannot be said with surety whether millennials will be better or worse off financially than their parents. However, a set of studies have confirmed that both generations have different spending patterns. While millennials are still figuring out how mutual funds work, their parents are currently living comfortably and are still able to provide for them due to decades of investments. There was initially a fear that millennials wouldn’t be able to enter the stock market but a range of surveys show millennials are saving and doing their best to invest. By buying mutual funds online, they can safeguard the amount they earn as it may not be adequate to deal with the constant rise in day to day expenses and healthcare. As parents, millenials will also have the added responsibility of saving for their child’s future and their own lives post-employment.
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