How millennials and their parents save differently
By Mahoor Shaw
IN a world where the millennial generation (26-41 years) accounts for around thirty per cent of the global population as of 2020, is the notion of a perceivably “lost” generation, a paradox?
Having faced multiple economic headwinds in the job market, be it a recession or the pandemic, millennials seem to have moved away from conventional lifestyles, particularly in North America and in developing South Asian countries like China and India. A shift that points to a reduced ability and/or willingness to take on significant economic and social commitments earlier in life.
In contrast to the Baby Boomers and Generation Y, millennials are more likely to define themselves as highly disciplined or disciplined financial planners. With an increasingly global mindset and factors like social responsibility, the environment and ethical choices frequently play a pivotal role in placing their money. Millennials are proving to be comfortable with cryptocurrency and point-of-sale lending alternatives.
While spending and earning styles have shifted dramatically across parents and millennials, the latter have wealth levels 34% below where they would most likely have been if the financial crisis hadn’t occurred. The 2008 Recession, followed by regional political turbulences that affect the global market, and the pandemic followed by the Russia-Ukraine War have pushed most economies towards inflation or stagflation, pushing the Millennials towards being financially wary or conservative.
Millennials are starting to save for retirement earlier than previous generations. Millennials started saving at 24 years, whereas Gen X started saving at 30 and the Baby Boomers at 33. Among those saving for retirement: 48% put money into savings every month, 67% who have savings are utilizing employer-sponsored retirement plans 28% would rather work harder today and retire early, instead of working longer and having more free time now and 52% who have savings are investing in the market.
With clarity in their financial goals, the millennial workforce is actively prioritising planning for the future over non-essential buying. As per the Bank of America, 73% of millennials are actively saving. The report found that the top savings priorities for millennials include building an emergency fund
(51%), retirement (75%), and buying a house (32%)4. Millennials are struggling more financially, than the previous generations despite reaching peak earning potential, which has impacted savings for contingencies drastically.
Against popular perception, millennials are displaying financial prudence. Ninety-five percent of Millennials report spending more time searching for savings than in prior years, via coupons, bulk deals and big discount days. A wariness exists with 72% of Millennials being significantly pessimistic about achieving financial security in retirement, compared to 43% of Boomers.
The borrowing intent and spending pattern of India’s millennials are not just recreational these days, but more responsibility driven. The eventfulness of the past three years has shifted the focus of the older millennials towards maintaining a healthy savings ratio over instant gratification and more thoughtful buying behaviour and responsible consumption patterns.
Though the saving pattern and financial prudence may vary across regions, the millennial generation with easy access to the internet displays more financial autonomy. They fearlessly have taken control of their funds and plan for their investments, loans and life decisions with great economic intuition. They may delay their larger life goals like a house, car or marriage, but go for them with better preparedness and sounder financial acumen than their parents.
Views expressed in the article are the author’s own and do not necessarily represent the editorial stance of Kashmir Observer
- The author is an experience curator and Digital Marketer
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