A worrying trend is emerging – Millennials are increasingly handcuffed by their expenditures. According to Business Insider Singapore, Singaporean millennials say that money is their top source of stress.
Why is managing personal finance a problem for millennials, more so than other generations? We breakdown the top reasons for their financial struggle.
Inflation & College Loans
Rising educational costs for millennials has become a notorious source of all-time-high student debt. Business Insider shared that the cost of student debt grew by 160% from 2004 to 2017. Not only that, consumers as a whole spent 16% more on housing in 2017 than in 2007, while healthcare costs increased by 21% in the same period.
Bogged down by inflation, they find that the time needed to save up for life milestones on their agenda to be prolonged. In fact, a SmartAsset report states that some cities may see potential buyers take nearly a decade to save for a 20% down payment on a house.
A growing aging population is an apparent phenomenon affecting the younger generation. Millennials have to support their aging parents on top of themselves or their new family – covering health insurance, meals, transport and more, with an income enough to support just an individual or two.
Moreover, despite earning less, millennials spend a significantly greater sum of money to provide for their aging elders, than older caregivers. That leaves them even lesser savings to meet their multiple financial goals.
How do we move forward?
While millennials may face greater financial challenges than other generations before them as mentioned in Forbes, managing personal finance is still possible by regulating what is within control – spending.
For starters, CEO of WealthUp, Qiuyan Tian, advised: “Figure out what your mental and emotional balance is. Then you’ll start making objective decisions.” On that note, it’s also wise to improve your financial literacy to make more informed decisions.
As a child, you can observe how the adults manage their money, take the financial advice of one’s parents or even question their financial choices. Practice your money management by budgeting your allowance. The small framework you construct for the spending of recess money translates to a good foundation for your income budgeting in the future.
Additionally, overcome the perceived sense of spending entitlement that comes with our first paycheck, and the glamour that follows spending on brands and even more brands. Learn to distinguish wants from needs, dispel brand loyalty, and spend within our means or reduce expenses. For example, buy your groceries and cook your own food, instead of eating out! It’s not only healthier, but cheaper; you’ll be killing two birds with one stone.
Educate yourself to make correct investments and yield greater returns in the long run. For example, invest in corporate bonds and money market funds for low-risk high returns.
As Erin Lowry, author of Broke Millennial once said: “Don’t let your spending prevent you from doing what you want with your life. Rather, let frugality sculpt the life you crave.”