Generation Y – otherwise known as millennials – has been called lazy, entitled “know-it-alls”.
But the harsh reality is that this generation also graduated into one of the toughest job markets with some of the highest student loan debt. They’ve had to be scrappy to find their financial footing in an uncertain economic climate.
As a result, today’s twenty and early thirty-somethings have largely eschewed purchases that previous generations consider a rite of passage. They’ve forged their own way in the job market.
Of course, there are exceptions to these generalizations. But in broad strokes, there are five primary millennial money lessons other generations can learn from.
Invest in your personal brand
Many millennials have watched parents or other relatives receive pink slips after decades of loyalty to one company.
After seeing two recessions in their young lives, they don’t expect to retire with a gold watch for 30 years of service to one company.
Instead, they’re embracing the side hustle. They’re creating their own income revenue stream from the ground up. Some are busy selling jewelry, creating a tutoring business or freelancing on the weekends. Others are building their personal brand through blogs, networking events, social media and more.
This scrappy, “do-it-myself” mentality will help them bounce back from lay-offs or other setbacks. It also reduces their reliance on a single company for income.
Minimize housing costs
Housing is the largest line item in most people’s monthly budgets.
Keeping that cost to a minimum can help free up funds for student loan payments, savings or other spending categories. Even if it means shacking up with roommates or moving back home with Mom and Dad, millennials do what it takes to cut costs.
The New York Times recently reported one in five people in their 20s and early 30s are currently living with their parents.
Meanwhile, a recent Trulia survey found that 18-34 year olds and those over age 55 were the most willing to downsize in case of a financial hardship. People between 34-55 years old were least willing.
For generations, Americans have purchased houses and cars as a means of reaching the ultimate “American Dream.”
But many millennials are questioning these assumptions. Instead, they are choosing to spend their money on experiences rather than McMansions and Mercedes.
Several studies show fewer young people buy cars compared to previous generations.
Think about it this way. Without a mortgage or car payment, millennials have greater mobility and financial flexibility. And when they need a set of wheels, they can always ride a bike or use a car-share service.
Millennials are extremely comfortable using mobile apps, posting on social media and communicating online.
This grasp of new technology makes these digital natives marketable as job candidates. It also means they’re taking advantage of ways to stay-on-top of their spending in real time. It also creates convenient ways to ensure bills are paid in a timely manner.
As a result, they can easily monitor their finances using a smartphone anywhere and at anytime. This use of technology makes it much easier to ensure you’re taking the best care of your finances.
Save for the future
Two recent studies show that millennials are saving money for the future, contrary to popular belief.
However, on the flip side, few younger workers take advantage of the tax benefits and employer match of a retirement account. Instead, many keep savings in cash rather than investing it in other areas.
In this case, setting up an IRA or participating in a employer-sponsored 401(k) or 403(b) would help them save more efficiently.