The Future Belongs To The Millennials And Here's Why!
Less Is More As Millennials Pave The Way To Financial Freedom!
There is an old expression that says change comes whether you like it or not. In addition, the people who are more likely to embrace the change are the millennials who now find themselves competing for jobs in a highly competitive, recessionary environment. Those who shun technology and the benefits it can bring to workplace productivity are likely to be relegated to obscurity. Old school conservative thinking may have a place in family dynamics, but it is hopelessly misplaced in the cutting-edge financial world we live in. There are mobile apps that can micromanage every conceivable aspect of our daily lives from the way we do our laundry, to how we lock our homes, check our rosters and measure our caloric intake. Everything is stored in the cloud – a digital hive of activity that connects us to our lives. We are now being fed a diet of ones and zeros, and we feel hopelessly deficient if we leave home without any of our digital accoutrements. This begs the question: have we evolved, or have we devolved? Our supreme reliance on the Internet and the gadgets, gizmos and accessories that connect us certainly has a place in today's world, and the digital market share is increasing with every passing minute.
Managing Your Money Made Simple
New-age financial experts have a new recipe for success. Their goal is to revolutionise the way that we perceive things by shifting expectations from conventional to unconventional thinking. To get the ball rolling, they suggest you should open a blank Word document. Stare at it until the whiteness cleanses your mind of any clutter. Now, you’re ready to proceed. If you're looking to manage your money in the most efficient and effective way possible, there is no need to enlist the services of an accounting firm or a financial analyst. You could for example take a look at LearnVest, which is dedicated to making money management easy. This mobile app is now valued at $250 million, and it was compiled by a 30-year-old lady from New York with the name Von Tobel. The point is that young people are using their usefulness and their derision for old ways of thinking to conjure up innovative ways to make money. All in all it is estimated that in excess of $1 billion has been ploughed into technology-related finance companies in 2014. And most of that money is going towards start-ups with millennials heading the efforts.
There are many inherent benefits in technology-driven initiatives. For starters, they are cost-effective and they get the job done. The scarcity of jobs has created an entirely new way of thinking among the young generation. Competition is fierce and ingenuity is one of the ways that younger people are gaining the edge over their older rivals. Every single dollar that is earned is appreciated, because it's simply way too uncertain in the conventional marketplace. Job security does not exist, and new ways of tackling the financial issues are being brought to the fore. And guess what? The older generation is buying into this – big time! Take a look around and you will instantly see how many people aged 40, 50 or 60 and above are texting their friends and relatives, colleagues and employers on any given day. We have become products of a technologically-driven society and the system has effectively been turned on its head. Barely a decade ago society was run in a hierarchical fashion from the top down, with the CEO dictating policy and everyone else being in compliance. Now we have innovators at the grassroots level creating incredible technologies that are used at the highest levels of society. Suddenly, you've got expert video gamers being used in military drone planning, and space exploration programs providing invaluable input and technological know-how. Kids are designing apps that connect millions of people globally, or instantly make people's lives better. The financial implications of this out-of-the-box thinking are mind-boggling.
How Millennials Measure Up
There are many other factors that weigh heavily on the younger generation today. First is the enormous burden that they have to bear with respect to debt. Whether they are liberals or conservatives, millennials understand that no system can sustain itself when too many people are withdrawing from it and not enough people are depositing into it. As such, things like Social Security will probably not be around by the time they retire, so they are forced to fend for themselves in unconventional ways. Debt also comes in another form – education. The price of getting through college is increasing by the year, and the real burden of repaying the debt has to be measured against the value of getting the education in the first place. Many degrees have little or no value, and many millennials are now considering whether it's worth it to take on so much debt and risk not finding employment.
Additionally, young people are taking on internships hoping that they may pan out into something more long-term. So you've got a glut of underemployed people that are overqualified at barely livable wages operating in the workforce. Millennials are the new poster child of financial independence. Moreover, the stats back it up: barely a year ago, 34% of people between the age of 25 and 32 had a bachelor’s degree, compared to 25% of generation X people between 1965 and 1980. For the baby boomers, this figure was 24%. This tells us that education is more a requirement then a luxury, but the flipside is that as more people get tertiary education, so the likelihood that you will find a job (in recessionary times) decreases. But it still beats having a high school diploma. The real worry is not education levels; it's real wages. In 1995 the median income was $43,663 and in 2013 the median income was $45,500.
Are Millennials Worrying as Much About Money?
Surprisingly, it appears that millennials are less concerned about maximising their incomes as they are about maximising the value of their lives. Many millennials have taken to travel and other leisure-related activities, rather than obsessing over the financial details. Attracting younger people to saving and investment opportunities has to be more interactive, immersive and fun. If you consider a typical investment brokerage firm, it is clear that the platform is not inviting to young people. You have to have expert knowledge to be able to invest in stocks, bonds, exchange traded funds, 401(k) retirement accounts etc. A survey conducted by UBS found that investors between 21-36 years of age had only 28% of their assets in stocks, with the rest of it being held in cash. As people get older, so their investment portfolios are more heavily weighted towards stocks, with less cash holdings. Millennials also participate in crowdsourcing as a way to invest, since this is a social and interactive financial medium. As a case in point, Upstart – a peer-to-peer lending site – uses an algorithm to rate the risk profile of customers by evaluating factors like their job history and SAT score. The loan rates range between 6% and 17.5%, and Upstart takes between 1% and 6% for its services. Throughout the financial service sector, we are seeing more and more use of computers over human advisers. The cost savings are dramatic, and the user-friendliness of computer programs is the clincher.
How Are Millennials Dealing With a Tough Job Market?
For starters, millennials have trimmed their expectations. They no longer dream of a massive house with a swimming pool and a double garage. They are more content to live with their parents longer, have roommates, or to rent over purchasing their own home. Many millennials carpool, or take the bus, and don't drive their own vehicles to work. Some of them have taken to bringing their own food to work and cutting down on all unnecessary expenses. People no longer trust office jobs as stable components of their lives. They would much rather shun money in exchange for freedom so that they don't have to put all their eggs into one basket. As such, about 50% of millennials feel more comfortable freelancing over holding down an office job.
40% of those polled preferred more free time than a bigger salary, and overall money is less important than it was to the previous generation. This has been brought on by the bruising effects of the recession and the difficulties it has caused to families and individuals alike. It is estimated that almost 4 million people between the ages of 20 - 34 are unemployed. For many people, there are simply no full-time jobs because of things like Obamacare which forces employers to provide mandatory health care to all full-time employees. So, people are taking part-time jobs instead. Other people are quitting their office jobs and taking up other forms of employment such as the arts, bar work, club work, work in resorts, and hotels. These hourly jobs and commission-based jobs offer greater freedom and as it turns out – more satisfaction. Overall, it looks like millennials are withdrawing from the era of consumerism and careerism, but all that will change when these young folks have families of their own.
Surprising Things that Millennials Are Doing With Their Money
Generation Y comprises people born between 1980 and 2000. In the US, there are some 85 million millennials, and they are a major economic and social force. The issues that distinguish millennials from other groups before them include the fact that they are extremely tech savvy and they have high levels of education. Put these two together and there is no limit to what they can achieve.
- Millennials are the primary users of smartphone apps with things like Snapcash and Venmo. These allow you to transfer money quicker, and in a more social manner than any other payment method. They connect you with your Facebook friends and initiate transfers in a social manner. Captions and comments are made public on social media profiles and you can even share pictures of one another as they transact and make payments/receive payments.
Mobile Payments with Venmo
- Millennials frown upon conventional regulation. That's why financial transactions in this new age are so much easier. Online money transfers by way of mobile apps and decentralised cryptocurrencies like Bitcoin have basically cut out all the regulation that governments, banks and tax authorities impose upon people. Apple Pay and Venmo are classic examples of the ultimate technology-driven money transfers. The speed of money transfer is unbelievable today, and that's thanks to the vision of millennials.
- Since millennials are now being attracted by more user-friendly investment opportunities, many more people are able to start saving and investing from an earlier age. The minimum account sizes are now more affordable to so many more people, and that's thanks to Generation Y. Betterment, Wealthfront, LearnVest and other investment vehicles are cases in point.
How Wealthfront Works
- The disruption index is tearing at the very fabric of conventional banking. It was concluded that 53% of millennials not believe that their bank offers them anything better than any other bank. This lends itself to lower loyalty rates among the younger generation, which is affecting the banks and causing them to stand up and take notice. Mobile banking has grown in leaps and bounds as a result of this. Now banks are pouring tremendous energy into making their mobile banking services more attractive and beneficial to clients.
- Millennials are no longer just worried about making money or losing money – they are worried about the social impact, the fiscal performance and the ecological impact of everything that they do. When they invest, there has to be a deeper meaning to the investment beyond the monetary gain or loss. It has to provide multiple benefits to the investor and society at large. This means that charitable giving is more important to millennials than it is to people from other generations. The Ice Bucket Challenge (ALS Association), Autism Awareness and other charitable causes are high-priority items in social media among millennials.