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Why Millennials Are Better With Money
When we think about millennials, a few less than complimentary stereotypes may come to mind. People born between the early 1980’s and early 2000’s are often labeled as entitled, debt-laden, and fiscally irresponsible, even by members of their own generation. However, various studies prove that millennials are far from careless with their money. In fact, spending their formative years during a recession may have permanently influenced them.

Why Millennials Are Better With Money

What Makes Millennials Good With Money? 

The good financial sense of millennials is evident in various ways. TD Ameritrade’s Next Generation Research survey looked into the financial habits of millennials vs. baby boomers. 80 percent of millennials stick to a planned budget, compared to 61 percent of boomers. Another survey by Bankrate revealed that millennials are saving more money than any other group – despite the pressures of squeezed wages and educational debt. 62 percent of millennials save more than 5 percent of their income, and 29 percent save over 10 percent.

Growth of The Gig and Sharing Economy 

As well as being more careful with their money, millennials have some innovative ways of spending and earning as well. The Sharing Economy is a socio-economic ecosystem built around the sharing of human, physical, and intellectual resources. Millennials use it purely by second nature. While Airbnb is an everyday example, even the very wealthy spend money in the sharing economy. Shared ownership of high-end products like luxury property and supercars are gaining in popularity.
The sharing economy hasn’t only grown due to young people’s lack of resources, but also through their preferences. Millennials prefer the flexibility and freedom of this new way of spending money over the responsibilities of direct ownership.
Another change is a labor market called the “gig economy,” characterized by casual work rather than permanent jobs. After the recession, many employers became reluctant to take on staff on a traditional basis. Instead, they engage freelancers, use zero-hour contracts or pay per hour. While this means millennials often work harder in less secure circumstances, it also carries the advantage of flexibility.
[RELATED: 7 Reasons “Pay” May NOT Be The Best Motivational Tool]

Effects of The 2008 Recession

So where do these habits, which seem so at odds with the stereotype of a self-obsessed youth who expects everything handed to them on a plate, originate from? Any millennial old enough to manage their own finances would have spent either their teenage years, graduation, or early career during the last recession. The 2008 downturn is one of the defining features of many millennials young lives. This undoubtedly affected how they think about money.
For example, a university attendee who’s 26 now would have entered higher education just as it became clear their options were shrinking, people were losing jobs, and credit was hard to find. Others would have had the even scarier prospect of diving into the job market in these conditions. Although we officially left the recession in 2010, for many it feels as though things never truly recovered.

Influence On The Millennial Mind-Set 

It’s in this context that millennials learned that “jobs for life” could disappear, that being a homeowner doesn’t guarantee financial security and that achieving your goals may well take more hard work than before. This naturally would lead people to develop a prudent outlook on money, especially considering high debt and difficulty in finding a fixed income. Furthermore, the millennials who were at working age during this uncertain time had to adapt and think differently than their parents. This variety of factors helped mold the economy as it appears today.
Products of this such as crowd funding and peer-to-peer lending make sense considering the lack of access to borrowed money for young people. However, the growing dominance of the sharing economy can also be attributed to other factors. This includes millennials’ well-documented lack of interest in owning physical things in favor of spending their money on experiences.

Rejecting Materialism

The transitory nature of an Airbnb holiday may seem like a frivolous way to spend money compared to the baby-boomers focus on home ownership. However, given that millennials witnessed how pouring money into physical things doesn’t alway pay off, this choice makes more sense. Coming of age during a global recession didn’t only change millennials attitude to money, it influenced their attitude to life. We now have a generation that has begun to reject material things in favor of experiences which are enriching in other ways.
It’s difficult to imagine how the world would look now without the 2008 recession. It seems to have influenced how millennials think most of all. Graduating when jobs were few and futures bleak caused millennials to think on their feet. The result of this not only made millennials better with money but also transformed the business landscape forever.

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