Nearly three-quarters (73%) of millennials are living paycheck to paycheck, according to a recent study -that is adults, aged 27-42.
Why is this significant?
Millennials make up the largest population group and could affect future generations’ wealth. If Millennials spend their entire salary for the month to make ends meet and battle to save, then their children will follow in their footsteps or be tasked with looking after them when they are retired.
Why are Millennials struggling to save money?
The rising cost of living and debt eats away at everyone’s disposable income, but Millennials have an even greater challenge to face.
Millennials are known as ‘The Sandwich Generation’. They carry the financial burden of not only supporting their children but also their elderly parents. They are literally sandwiched in as they care for three generations. This leaves very little day-to-day disposable income left for things such as saving, retirement planning or education savings.
- Rise in the cost of living – Life is getting more expensive, and disposable income is depleting.
- Inflation eats away at your money – These days, you spend more money to get the same as you did before.
- The challenges of debt – the rising cost of living is forcing many to take out debt to afford the lifestyle they want.
- Extended family responsibilities – Many millennials look after their ageing parents as well or support them financially.
How do you overcome the challenges of saving?
Take it week by week. The key is to start small and not to be overwhelmed by what seems like a large unobtainable goal, like saving 10 000 by the end of the year.
- Get help from the best-qualified people to overcome saving challenges – a financial advisor can help analyse your budget to find ways to save towards a rainy-day fund or retirement.
- Discouragement is the biggest saving challenge – it is easy to lose motivation and become overwhelmed by the cost of living. Ask your financial advisor to help keep you accountable.
- Budget, budget, budget – This might seem like a cliché, but budgets keep control of the spending. How many times have you budgeted and then gone crazy with the spending at the mall, destroying the budget?
- Open a separate savings account – keep your savings far away from your main account. A separate savings account makes you less tempted to spend it.
- Spend less money every week – you’ll be surprised how much we spend unnecessarily in a week. Those coffees in the morning, silly app subscriptions or eating out at lunch. Add all that up, and it could be going into that savings account or be a retirement savings contribution.
- Start saving small – Saving can be overwhelming. Start saving small amounts to get into the savings habit and, over time, increase your savings contributions.
- Avoid credit and use it sparingly – Debt repayment can consume a large portion of your disposable income. We live in a world of instant gratification, and credit is the easiest way to get what we want now, leaving us with large monthly debt repayments.
- Time is your best friend – Time is what savings need to grow and achieve goals.
- Lifestyle changes – Even small adjustments to our lifestyle can save money every month. It all adds up over a year.
- Save cash when you can – deVere offers fintech savings apps like Catalyst that let you save as you have extra cash.
Millennials do have a serious challenge when it comes to saving money, but it is not all doom and gloom. There are solutions to make savings easier and possible.
Your financial advisor is the best person to help you sort out your finances and get a savings plan in place to get you on your way to financial freedom, financial security and stress-free retirement.
Please note the above is for educational purposes only and does not constitute advice. You should always contact your deVere advisor for a personal consultation.
* No liability can be accepted for any actions taken or refrained from being taken as a result of reading the above.