6 Smart Money Habits of Millennials
Despite, or perhaps because of, their challenges with student loans, a difficult job market and struggling economy, millennials have mastered a few money strategies that continue to elude older generations, including their parents. They don't hesitate to employ frugal tricks that lower their expenses, embrace experiences over material goods and even think more about saving for retirement.
"We are seeing a shift away from materialism in this generation. I think for millennials, they have a, 'I can figure it out for myself' attitude, and the recession really [made] them think freshly [about their career and money]," says Michelle Masek, a spokeswoman for Eventbrite, an online ticketing service that recently conducted a survey on millennials. Masek adds that as a member of this generation (she's 27), she also embraces experiences over things. "Most of my disposable income goes to traveling, concerts and fairs," she says.
An April survey of 152 adults ages 25 to 34 by Fidelity found that millennials tend to worry a lot about money, with 4 in 10 worrying about money at least once a week "Especially at a very young age, they're very concerned. The majority of them are saving for retirement," says Kristen Robinson, Fidelity senior vice president of women and young investors. Previous generations, she says, did not worry as much about retirement at that age, partly because they were more likely to have pensions.
This younger generation also has the advantage of having watched their parents, and the economy as a whole, suffer through difficult times. "They grew up during the recession, and they've seen their parents lose a lot of money," Robinson says, which might be part of the reason they are eager to bulk up savings and manage their money more conservatively.
Given those impressive goals, here are six smart financial strategies commonly employed by millennials that older generations should consider embracing, too:
Embrace experiences over material goods. The Eventbrite survey of over 2,000 adults found that 3 in 4 millennials said they would rather spend money on an experience than a material object, and that age group also reported attending 10 percent more events than older age groups. "For older generations, luxury goods were cars and homes, but now they're experiences," Masek says.
When you pay for an experience, you get to enjoy the anticipation, event itself and then the memory of the event -- that's three units of happiness for one price, Masek says. "Older generations can steal a page from this mentality, and use experiences to help energize them and live a fulfilling life," she adds.
Talk more openly about money. According to the Fidelity survey, 3 in 4 millennials said they have no problem starting discussions with their parents about saving and investing. Parents could learn something from that willingness to talk, Robinson says. "Millennials are much more open when it comes to talking about money," she adds.
Save more for the future. Another positive attribute of Gen Y is their savings habits and how much they are focused on retirement, even in their 20s. The Fidelity survey found that over half of millennials listed "accumulate more for retirement" as one of their top challenges, and almost half said they've already started saving for retirement. "Those millennials that are saving and are very responsible with their finances, I do think they likely have an impact on their parents," Robinson says, simply by modeling good behavior themselves and through conversations about money.
Use apps to manage your money. In addition to budgeting and banking apps, millennials are also using offbeat tools to keep more money in their bank accounts. Erin Lowry, founder of BrokeMillennial.com and a U.S. News blogger, recommends the app Venmo, which makes it easy to pay back friends. The app connects with your bank account or credit card and uses bank-level security to keep your information safe. "Granted, you both need Venmo to use it, but it's rarely difficult to convince a member of Gen Y to download an app," Lowry says.
Never pay full price. Between price comparison websites and apps that track coupons for you, Lowry points out that it's never been easier to make sure you're paying as little as possible for clothes, technology and other items. Take full advantage of the discount resources available at your fingertips through your smartphone, just as millennials do without a second thought.
Volunteer for free access. When you serve as a volunteer usher at off-Broadway plays, you can watch the show for free, Lowry says. Other entertainment venues offer similar deals. Lowry points out that volunteers also get free admission at beer festivals, museums and concerts. Patrons of any age can take advantage of that deal, and it's especially useful for people who value those kind of memory-creating experiences.
The savings generated from these strategies will help you funnel more money into long-term investment accounts for retirement or other goals, which is a good idea for Gen Y and their parents alike.
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