What are the differences between the millennial, that is, generation "Y" versus their parents, that is, generation 'X" in terms of financial habits?
Millennials often get caught in the trap of making the most out of their money. Unlike them, their parents had fewer financial goals which included retirement planning, buying a house or their children's education. Their goals were few and specific and they did not resort to taking loans for funding luxury items. Most of them never purchased or constructed their first house while they were in their 20s, preferring to wait till they were in their their late 30s or 40s. Most of them never owned a car or even if they did, it only came during their retirement phase.
Their travel spending was mostly restricted to visiting a close family member or travel within India. Spending money to travel to an exotic location was out of question. They got married early and expenses on medical, education or luxury was much lesser than today. These truisms are applicable to most Indian middle class families.
Compared to them, millennials tend to get married late or may choose to remain single. They may or may not plan to have kids or could be happy raising a single child. They love to spend and don't hesitate taking loans to buy house, car, mobile, TV or even apparel. They also believe in maintaining a healthy work-life balance.
Most of this happens due to high income and lesser responsibilities, the easy availability of loans and the whole credit cards and Equated Monthly Installment culture. For many millennials the latest smartphone is a must buy and they upgrade their phones every year. In fact, the younger millennials tend to live for weekends and their goals are very short term in nature. The entire planning revolves around this.
Due to this they expect their investments to work like magic. They want their stock investments to become multi-baggers and may not shy away from investing in products such as bitcoins. We are in a world of instant gratification and want everything fast and now.
There is also an information overload and the feeling of knowing it all. Earlier people used to be perfectly fine about not knowing a thing or two. As compared to that, now when you ask a person something and if that person doesn't know the answer, he/she will immediately look up the information online or may lose sleep over it. We need to know all. This speed, which if used cautiously is great, but in reality is causing lot of disturbance. There is too much information available along with huge trust deficit which is making things complex.
I suggest millennials to set specific measurable financial goals. Learn to manage your cash flow, then managing money will be simpler than it seems. The key is to be disciplined, patient like your parents and make the most of your money. Be sensible with your spending the way your parents were. Use technology to help you plan and manage your money better. Always remember that life was much simpler when apple and blackberry were simple fruits.
Not everything is bad in terms of the way millennials manage their money. The objective is to highlight the paradigm shift in the way money was perceived and managed earlier and now. Being patient and diligent and the proper use of technology, can go a long way in creating wealth for millennials.
The writer is chief gardener, Money Plant Consultancy