Millennial Money: Why Millennials handle money the way they do
It has been shown that every generation is shaped by the events and experiences that happened during their lives. Unsurprisingly, growing up during the Great Depression and WWII largely impacted the Silent Generation. The Baby Boomers had different experiences, like living through the assassinations of impactful leaders such as Martin Luther King and John F Kennedy, which led them to challenge and reject institutions that were intended to provide them security. And when it comes to how Millennials deal with money, it is clear they are predominantly impacted by the events of 9/11 and the Great Recession that began in 2008.
The Millennial mindset is based off of three main factors. The first is having a global mindset, which comes directly from living through 9/11 and seeing how everyone rallied together in a time of hardship. The second is a lack of trust when it comes to financial institutions and their money – an effect of seeing their parents struggle through the market crash of 2008. Third is the rise of social media in their lifetime, and the desire to appear to “keep up with the Joneses.” These factors clearly affect how Millennials manage, spend and even earn money.
When it comes to managing money, Millennials are affected mainly by their global mindset and their lack of trust in the financial services industry. This global mindset comes into play when a Millennial invests. Factors such as social responsibility and the environment are things this generation thinks about when investing and when deciding where to put their money. They also put their instincts aside when investing and tend to follow the path their peers are taking, which gives them a sense of community and someone to go through financial ups and downs with. This helps with their lack of trust in the industry, as does the use of apps. Financial apps allow this generation to feel more financially independent and able to take their financial decisions into their own hands.
The social media boom mentioned above is one of the biggest factors for how Millennials spend their money. Because every Millennial can share parts of their life through social media, there is a huge desire to have what other people have. This causes Millennials to be more interested in short term spending versus long term saving, and often leads to debt. 75 percent of Millennials are currently in debt and define financial stability as simply as being able to pay their bills each month.
Believe it or not, even the way Millennials earn money comes from their global mindset. Although they keep compensation in mind when taking a new job, it is not their top priority. Millennials want work that enriches both themselves and the world around them; they also want to show the good and the work they are doing through social media.
Perception often defines reality, and when it comes to the way Millennials make, save, and spend their money – perception is everything.