Millennials are becoming the biggest generation in the workplace. They are defined as young adults in their 20s and early 30s. These individuals typically dive in headfirst to get the car and the house while still carrying student loans. To their friends on social media, their lives appear stable. They are often sharing their smiley faces on social media like Instagram pictures, however behind those smiley faces lurks the truth: They tend to want to have instant gratification at all costs. But what financial planning considerations should this generation make to achieve future financial independence and freedom?
Millennials live in the era of information overload which may leave them confused especially with regards to appropriate financial planning solutions at these early stages of their careers. Their tendency and preference is to use on-line research and application to meet their requirements. With the impending “Robo-advice”, this generation would jump to this opportunity. Face-to-face engagement with a Certified Financial Planner is still necessary to ensure that no aspects have been overlooked by the millennial applicant.
Detailed below is the human touch the millennials will benefit by engaging a Certified Financial Planner (CFP). First of all the CFP professional will demonstrate that Personal Financial Planning is easy to understand and will ease the implementation of the financial plan via the following principles:
1. Financial Planning is deeply connected to all aspects of modern life, so the millennial should not isolate it
2. Spending less than you earn – if millennials spend more than they earn , they will end up in a miserable situation of indebtedness
3. Track your spending –doing this will help millennials to avoid over-spending mistakes often experienced during this stage
4. Have a goal-orientated financial plan- this means putting large goals that need lots of financial support central in their life, aligning professional and financial and, to an extent, personal moves around those big goals.
Many Millennials see themselves working forever, but not because they expect to be forced into that situation by a bad economy or poor financial planning. They envision a lifelong career because of their passion for what they do. Retirement provision is very much necessary due to longevity and increased life expectancy.
Millennials are often misjudged as spoilt and misbehaved with no regard for family values. Research shows that they are in fact close to their families, especially their parents. These parents are often careful with their financial affairs; and they may impart this experience to their millennials.
Earning power is often limited for millennials. They may not have enough knowledge or experience to command a large salary, but they have an asset that their parents don’t have: time. Millennials should make the most of it by inculcating the savings habit as early as possible to benefit from the compounding effect.
Certified Financial Planner and member of Financial Planning Institute
10 August 2016