Millennials are not people born during the 21st century, but individuals whose lives have been shaped by recent developments and advances. A typical definition of a millennial might be someone who was born between 1982 and 2004, according to authors Neil Howe and William Strauss, who are widely credited with coming up with the term.
Today’s young adults typically face a variety of financial challenges, which may include:
- Making mortgage repayments – millennials may be in the early stages of home ownership, and forced to take on this significant financial commitment for the first time
- Trying to save for a house deposit whilst also paying rent on their current residence – on the other hand, many millennials are not yet in a position to purchase a home, but would really like to get on the housing ladder
- Paying off student loans – a high proportion of millennials will have studied at university, and will need to pay off their tuition fee debts, and any loans they took out for other reasons at uni.
- Paying off other debt, such as car loans; or personal loans, credit cards or overdrafts taken out to fund their lifestyle – few people can afford to purchase a car without a loan, and many people are also tempted to borrow for a multitude of other reasons
- Accumulating a fund that can be used in case of financial emergency – financial commentators recommend that everyone tries to save to build up an emergency fund of at least three months essential expenditure
- Providing for their new-born children – the older millennials are of course at the age when one normally has children, and no one needs any reminding of the fact that children can be very expensive
- Trying to start saving for their retirement (if there is anything left over once the above needs have been addressed) – while retirement may seem a long way off for today’s millennials, there are clear advantages to commencing pension saving early in one’s working life, allowing 40 years or more for the funds to grow
A survey by accountants Deloitte of 8,000 millennials across 30 countries found that only 36% expected to be financially better off than their parents’ generation. Only 31% expect to be happier than the previous generation.
Amongst those surveyed in South Africa, only 38% expected the nation’s economy to improve in the immediate future. Globally, one in four of those surveyed was worried about the prospect of becoming unemployed, but this rose to 45% when we look solely at South African millennials.
A separate survey by 10X Investment suggested only 35% of South Africans between the ages of 25 and 35 were saving for the longer term in any way.
Wonga South Africa claims that half of young people in their mid to late 20s are still living with their parents, as they can’t afford a home of their own.
Recognising the challenges facing this generation, the company has published some millennial money saving tips on its website.
Every individual is of course different, and this applies equally to today’s millennials. However, millennials are less likely to smoke and drink than the previous generation, are better educated and are often extremely comfortable with modern technology. All of these could perhaps, in different ways, help them save money.