Do you have someone in your family that is part of Generation Y or also known as a Millennial? Millennial refers to the generation currently in their mid-20s to early-mid 30s, who were born between 1980 and the early 2000s. Celebrated and criticised equally, this generation is characterised by its access to information, technology and travel more than previous generations. Equally, Millennials have been shown to have very different attitudes to work and money than the generations that came before them.
Millennials have also experienced an environment of economic volatility early in their adulthood, in some cases effecting their employment and their propensity to earn. For these reasons, many in this generation are choosing to live in the family home for longer and waiting until later in life to enter home ownership.
Research suggests a range of trends in how Millennials thinks about money. If you want to engage your Millennial family-member in improving their financial management skills or even involving them in the family finances, you might consider some of the following:
- Create rules around the Bank of Mum and Dad
Whether borrowing, paying rent or contributing to household expenses, ensuring that your Millennial is accountable for their use of the ‘Bank of Mum and Dad’ is a useful place to start. Pulling their weight and paying their share of household expenses creates a broader awareness around the practicalities of running a household and maintaining a certain lifestyle, and informs their understanding of what it takes to live independently.
- Involve them in a long-term savings goal
Studies highlight that Millennials show consistent savings habits on a month-by-month basis, however this does not necessarily equate to implementing long-term savings habits. Whether it’s an apartment or buying dad’s old car, help them create a tangible long-term savings goal that incentivises saving today.
- Engaging with super
A persistent issue for superannuation is a lack of engagement from those who are furthest away from retirement, such as those currently in their 20s and 30s. People in this age bracket are also more likely to have several superannuation accounts due to the multiple job roles that characterise early stages of people’s employment lives. Talk to your Millennial son or daughter about managing their superannuation, for example by selecting an investment option most appropriate for their life stage and risk preference, or consolidating multiple superannuation accounts to minimise fees. This can be a useful way to start preparing them for making informed decisions with regards to their super.
- Discuss debt
Millennials are recorded to have more debt and at an earlier age than any other generation before them. While this may be in large part due to student loans and the introduction of AfterPay for retail goods, this trend is also resulting in longer debt repayment periods. If your Millennial family-member has a loan or credit card, make sure they are aware of their total principal and interest payments and help them create a practical repayment schedule. This may be part of a larger debt management plan.
- Help them put a plan in place
While Millennials are more than capable of creating a budget, few actually do so. From writing up a basic budget at home on Excel, through to visiting a financial adviser to get a run down on options for future financial savings and goals, getting numbers down in black and white and tracking finances is a highly valuable exercise to start engaging your Millennial family-member on money matters.
- Encourage the entrepreneur
Statistics repeatedly show that Millennials have a strong tendency towards entrepreneurship, with this age-group comprising a large section of new company registrations over the past few years. This could be attributable to the attractiveness of new digital business models, a trend towards collaborative start-ups or simply a desire for self-employment. Whatever the case, if your Millennial has an idea for a small business, you can guide them in turning this idea into a tangible outcome by providing personal, financial and administrative insight from your own experiences. Running a business is a meaningful way in which to learn to become more responsible with money.