Dear Millennials, if you think you have a lifetime to save, think again! The future is nearer than you think. Some might say that 75 is the new 60 for Millennials. And that means that those who haven’t honed a healthy savings habit might be retiring a lot later than they expected.
It seems for many UK Millennials, Brexit isn’t the only uncertainty that has got the younger generation thinking about finances. In fact, there’s a new trend seen in Millennials paying attention, taking stock, and asking questions about finances that they certainly haven’t before. While there’s slight changes seen in Millennial financial behaviour, the statistics are still rather shocking. Did you know that more than 50% of Millennials in the UK have absolutely nothing saved? The Office of National Statistics released figures that show 53% of 22-29 year olds have no savings and that the proportion of home owners in their 20’s has dropped from 37% to 27%.
By nature, Millennials tend to put their money towards experiences rather than investing in property and assets. If you’re setting aside the important task of saving for your future and retirement, you’re making a mistake that will make your life quite uncomfortable in the years to come. We believe that it’s crucial to save as much as you can, starting today!
I’m a Millennial, Why Should I Save?
The general attitude of Millennials towards savings - up until now - has most certainly been one of “why should I save?”. One might think that the generation is blasé and that needs to change. Retirement will certainly be tough without the finances to support oneself.
The fact of the matter is that the Millennial generation is off to slow start when it comes to retirement savings. And personal finance experts need to find innovative ways to engage better with this particular demographic.
Generally speaking, Millennials aren’t interested in money that will support them in future. They are a community that wants access to their money, services, technology and a comfortable lifestyle now, not “just now”. According to some industry experts, pension funds need to change to resonate with Millennials. In an article featured on the insurance brand Zurich’s website, Ken Hughes, who is a shopper and consumer behaviourist, said “The pension product might not be relevant to the Millennial right now. The main problem is the long-term projection. The Millennial isn't interested in money that will be there for them in 40 years, they want access to it now”. But are pension funds really all that there is to blame? Isn’t the Millennial responsible for taking their own personal finances into account (and taking action)? We certainly believe so.
While it’s agreed that pension products and engagement should start showing active changes, Millennials also need to know why they should start saving for the future now, and start taking responsibility for their personal finances.
Hey Millennials! Check This Out!
If you’re a Millennial, you can save and live life to the full at the same time!
Why you need to start saving now:
Time and compound interest work hand-in-hand. The earlier you start saving, the more interest you will accumulate. The difference between starting saving now and starting to save when you are 40 can amount to hundreds of thousands of pounds.
Your credit score will be impressive. Without any savings or investments, your credit score can be poor. With time, and a healthy bank balance, your credit score will improve. This will be highly beneficial to you if/when you apply for a home loan, business loan or want to make certain investments.
4 Ways you can effectively save and live the life you enjoy
Set a budget and keep on top of your cash flow. It’s important to have a list of household and living expenses to stick to. You also need to check weekly to ensure that you don’t overspend too much each week on ongoing expenses. If you overspend one week, try to live a little leaner the next. This will help to keep your budget in line and your savings on track.
Consider using a money management app that’s designed to help you manage expenses, minimise debt, boost savings, and fund important financial goals. Once you familiarise yourself with such apps, you will find that they are quick and easy to use and will greatly improve your personal finances. A good recommendation is that you start out managing your money with an app such as Yolt.
For more information on how to manage your money, why not visit the Money Advice Service.
Automate your savings. If you are employed, your salary will be paid into your bank account. By setting up a direct debit into your savings account, you can automatically save every month. Money that is out of site and mind is less likely to be spent on whimsical purchases and experiences.
Prepare for impulsive and unexpected expenses. It might seem contradictory to prepare for impulsive spending, but it’s highly possible to do. Everyone experiences those impulsive nights out or activities and purchases that cut into cash flow. By setting aside an amount each month, you can have a stash to help ease the impact of unexpected spending.
The future of our finances is never really set in stone. The best that one can do is be as prepared as possible for it. Millennials who are asking questions and making personal finance changes are on the right track. Save for your future before it comes around - that way you avoid looking back with regret!
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