The Millennial Generation (also known as Generation Y, Generation WE, The Boomerang Generation, and The Peter Pan Generation) were born in America roughly between 1980 and 2000 and consist of approximately 70 million people, according to a 2014 U.S. Census Bureau Report. And though it’s wise to avoid painting a population that large with a very broad brush, the Millennials do seem to share certain defining characteristics, and that includes some unique habits and circumstances as it pertains to their financial lives.
Millennials are the first generation in history that has grown up completely immersed in a world of digital technology. Born digital natives, technology has always been a part of their lives. As a result, they possess an intuitive understanding about how technology functions, and they may offer a more creative and innovative approach to problem solving than previous generations before them.
In the workplace, Millennials may be more individualistic, independent, multi-taskers, and ardent defenders of diversity than previous generations. They may work well as members of a team and prefer a supportive, structured environment. They may also strive for balance between their work and personal lives, usually avoiding jobs that require long hours, evening or weekend work.
Millennials are also looking for meaning in their work – a place where they can genuinely contribute to the company’s overall objectives and goals, and not just add to its bottom line.
Some Millennials were around for the dot.com crash in 2000 but all of them experienced the carnage of the Great Recession and its aftermath in 2008-09. They witnessed the collapse in value of their families’ homes, and they saw their parents’ 401k accounts practically disappear overnight. They graduated from college – carrying enormous student debt – and entered a sluggish job market with depressed and stagnant wages.
It’s no wonder then that this generation appears to be generally risk-averse and has the highest saving rate of any generation before them, according to a study from Bankrate. They have seen up close the devastation that a major recession can cause and they feel compelled to save as much money as they can.
Also, many Millennials may believe they will never be able to achieve the same level of material success as their parents did, like finding their dream job, or buying a house, or enjoying a secure retirement. The recession left many Millennials in their early 20s out of work, and in a radical departure from previous generations, nearly 1 in 3 are still living at home with their parents, according to the U.S. Census Bureau.
A recent survey from the American Institute of Certified Public Accountants provides some revealing details about Millennial spending habits:
50% are still receiving some form of financial aid from their parents
Of course, the prevalence and ubiquity of social media has a lot to do with the pressure that Millennials feel to keep up with the spending habits of their peers. Every new milestone purchase (new car, new house/apartment, fancy vacation, luxury purchase, etc.) is shared on social media for all their friends to see and envy.
The oldest of the Millennial Generation are now in their mid-30s and have been in the workforce for over 10 years. And though it’s true that they have faced unique challenges starting out in life, it’s also true that this generation faces the same kind of financial choices and decisions that previous generations have always had to make – the kinds of decisions and tradeoffs that come with major life events – marriage, children, buying a home, saving for retirement, investment planning, etc. And, as always, the best way to successfully manage those life events is to properly plan for them.
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