The Millennials, otherwise known as Generation Y, get a bad press as entitled, permissive, narcissistic ne’er-do-wells, consumed with social media and reality television.
A recent study from Fidelity found that almost 4 in 10 Millennials (anyone born between 1981 and 1997) in the US worry about their financial future once a week or more. According to financial advisors, this stems from a lack of confidence in managing their money, which is also evidenced by a recent report from Bank of America and Merrill Edge. The BoA report found that the 43% of Millennials planned to rely on loved ones for support when they retired, compared with 21% of Gen Xers, and just 4% of baby boomers. Which possibly doesn’t help Generation Y’s bad press.
Judith Ward, a financial planner at T. Rowe Price, argues that a lack of education from schools and parents means that many Millennials do not know where to start when it comes to their finances, noting that the majority of US schools still have no financial literacy program in place. In the UK, this has only recently changed. As of last September, financial education has been included in the new maths and citizenship curriculum, introducing students to the concepts of saving, borrowing, and interest.
It could be argued that blaming a lack of education is odd, given that previous generations were similarly poorly educated in personal finances. The 2013 Financial Capability of the UK report, by the Money Advice Service (MAS), found that 16% of UK adults could not identify their balance on their bank statement, rising to 25% of those aged over 55. Meanwhile, 35% of adults didn’t understand the impact on inflation, all of which implies that poor personal finance knowledge is not a generational issue.
The pessimism apparent in the findings of the survey may equally be explained by the number of Generation Y who hit the working world in the difficult economic climate that followed the financial crisis, with stagnant wages and high house prices meaning many see little scope to accumulate assets that could be kept for old age.
Fortunately, there are now a number of apps available that can be used to budget better, which should be of particular benefit to members of Generation Y who are looking to keep better control over their finances. In order to begin saving the required amount for retirement, tools such as Mint and GoodBudget are a good way of keeping track of expenses.
Eric Roberge, a certified financial planner whose business caters to Millennials, argues that 'for Millennials, this is the time to take action around their finances. This involves taking a hard look at their income and expenses and their assets and debt. These items make up their financial foundations.' Fortunately, Bank of America's report also found that there was a significant increase in the percentage of people who say they're making their future finances a priority, jumping from 48% to 61% in one year, which suggests that things are improving.