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Are millennials financially fragile?

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A study by PwC has concluded that 65 per cent of millennials would not be able to handle a $2,000 unexpected expense and that they are unlikely to seek financial advice. The article discusses the way this generation thinks about money and their outlook on the future.

The millennial generation, now aged between 22 and 37, are deemed to be the hardest people to understand and are sometimes referred to as the “rush-rush” generation.

Millennials want everything to happen right away. They dash into the coffee shop, swipe their debit card and exit even faster. If the bank doesn’t have an app to be able to conduct their banking business while walking along the street, they stall, and hope their paycheque made it in automatically. And then paying their bills online — while better than finding the time in their lunch break — is nonetheless a nuisance.

They are technologically superior to every other generation. They live online. They converse online. They get their entertainment online. They do their work online. Leaving home without their smartphone is like leaving home naked. Interestingly, because they are addicted to having their phone stuck to their ear, and are oblivious to anything and everything else, they could quite easily leave home missing a few bits and bobs.

However never think that millennials have no interest in money or never pay attention to their financial affairs.

Their life revolves around being online for everything — from music to health matters, from chat rooms to grocery shopping, from job seeking to travelling the world. They even have the time to read financial and business news articles.

When something about pensions and investments appears, they may not bookmark the page, but they will take a cursory glance — just in case they are missing something that could impact their financial affairs, such as they are.

In fact if some superstar posts something on Twitter about their own financial situation, albeit he/she will be in the big leagues, the short message concept appeals to the millennial — they get all they need in those few words.

Therefore, the myth that has been created by older generations who think the millennial is careless about money is wrong.

The core problem is simply that they don’t have that much of it — yet. They are hopefully employed but, in today’s economic climate their salary is probably at the lower end of the scale. Moreover, they may still have some college debt to pay off to the bank, or to mom and dad.

Accumulation of money is high on their “to do” list, but low on their “done it” list. They understand the value of money and they recognise that by the time they will get to retirement planning, their current savings strategy will not be enough.

In fact, they are concerned that social security funds may be non-existent by then.

About 60 per cent of millennials have a savings goal. They have a plan to save regularly albeit they may fall short now and again, but they do know what is required. In other words, while they may seem to spend frivolously and indeed recklessly, at least to their parents, they have a deep understanding that saving for the long term is important.

The irony is that when their parents were their age, the idea of long-term savings was for others. They believed their Defined Benefit Plans would be more than adequate. Not so.

The millennial is well aware of the changes in pension administration, current budgeting and long-term forecasting.

They may complain about not having enough money to save at the end of the month — and that may be true — but their argument is — why bother being worried about it?

But if there isn’t any money left over, the ability to save is obviously bordering on impossible.

However, they may have worked out that even a small monthly voluntary contribution to their employment pension plan, or a small deposit to a savings account, will add up over time. Achieving a high return on small amounts of savings doesn’t concern them too much.

They are very aware that their high-earning years are ahead of them and that while they want to drive far and fast, they accept that they don’t have enough gas in the tank — not yet anyway. Their savings years are ahead of them — but when they get there, they will be very clear what needs to be done to financially secure their older years.

So, while the perception of millennials being spend-free and driven by experiences rather than asset accumulation, may be true, it is only a short-term scenario which will be corrected over a short-to-medium timeframe. They have ample years ahead of them.

Luckily, they do know what needs to be done.

Bill Storie is co-founder and chief executive of The Olderhood Group, a leading organisation in online information for people planning or presently in retirement