Millennials have time on their side
As part of the Bermuda’s Demographic Challenge series running all this week in The Royal Gazette, Bill Storie will be writing for a series of five columns to view the issues related to our ageing population through the eyes of different ages.
The first age group we will discuss is the 18- to 35-year-olds, commonly referred to as millennials. In Bermuda, this age group numbers about 15,000 today and by the year 2026 will still have about the same total, according the Bermuda Government’s Department of Statistics.
According to Pew Research, 59 per cent of millennials describe the members of their generation as self-absorbed, 49 per cent say they are wasteful and 43 per cent describe them as greedy. In fact, most millennials don’t like the title “millennial”.
Like most people in this cohort around the world, millennials in Bermuda have three core concerns — money, accommodation and employment, not necessarily in that order.
The millennial is fully aware of the importance of saving for the long term. It may not be in their mind at this age to be contemplating their retirement years and the financial issues therein, but they do recognise that the need to look to their financial future is critical.
Many of them carry student debt and while that is an accepted part of the education process, nonetheless it is a concern, rightly so.
Whether they owe the bank or mom and dad makes little difference, although repaying mom and dad tends to be a lesser priority than the bank.
Their savings routine such as it is, may solely involve a savings account at the bank, with low interest rates. The concept is correct and the reason they don’t invest more efficiently is not due to a lack of interest or knowledge, but simply a lack of investable funds. That will improve as they go through various employment phases.
Many people in this demographic are suffering financially for a variety of reasons, including being single parents. It is not uncommon for the single mother to have one, perhaps two children at an early age, and while she is employed, is not making enough money to rent her own apartment, far less buy one. So, the mom and the children stay with the grandparents or relatives. Moreover, the grandparents provide daycare and baby-sitting services and it is fair to say that the mother would not “survive” without their help.
Equally, many within this cohort are not married and stay at their parent’s home. They are not married perhaps through personal choice, but also because they can’t afford to get married, especially when they feel that living away from their both sets of parents would be mandatory. This age group generally are therefore less likely to get married than any other generation in the earlier stage of their life.
This generation is the most technically advanced of any generation. Yet in many instances their technical knowledge is significantly underused. The rate of unemployment overall, within millennials, is relatively high, but equally concerning, employment within their “area of knowledge” can mean a lower salary is offered, which simply must be accepted. There are many reasons for that, including their employers being “technologically behind”, thus not appreciating the millennial’s capability.
One of the side results of the employment/accommodation factor is that the millennial may easily find their health insurance needs have to be met through their parents.
There is a low sense of entrepreneurship in this cohort — starting their own business is not high on their wish list. This may be due to a lack of business planning advice or simply a fear of launching a new venture and committing scarce funds. Borrowing from banks would be difficult and borrowing from relatives is deemed risky, by both parties.
Ideas to consider
1. Financial literacy
In today’s complex financial world, the need for a knowledge of various savings, banking and investment terms is becoming increasingly vital. There is no need to become a certified financial analyst of course, but a basic understanding of mutual funds, pensions and investment products would be useful.
Having the most appropriate qualification to suit your personal interests is fine, unless of course it doesn’t allow job opportunities to appear. Marine biology in the Pacific Ocean may sound wonderful, but unlikely to get you a job here, or anywhere perhaps.
It is important to not overextend on debt. Unavoidable debt such as college fees, job training, car and, perhaps, a mortgage, are generally sensible. However, extending debt to go on exotic vacations or buy custom-designer clothes, for example, may not be in your best financial interests.
If you stay at home with your parents, it is likely you don’t pay rent. You may contribute to the grocery bill but not at the level of the “correct” rent. So, to get you into the rent mode of life start putting the correct amount away into a savings account each month. Try to persuade your parents to let you do so on your own and not use it as a repayment fund.
5. Life experiences
Don’t miss out on life events due to a lack of money. If the money just is not there, then don’t borrow it, but have fun as best as possible. At this age, you should have fun, either alone, with friends or family. You want to be able to look back and say, “Wow, were we crazy or what?”
Timeline advisory: No rush
• Bill Storie is CEO of The Olderhood Group Ltd, a Bermudian company and exclusive Bermuda partner of Career Partners International, with more than 350 offices worldwide. He is also producer and host of “The Ozone” a weekly radio show on Magic 102.7FM. He can be reached at www.olderhoodgroup.com or Bill@olderhood.com