Millennials, also known as Gen-Y, are the newer entrants into the economy, with a substantial presence that exceeds 400 million. Born between 1980 and 2000 and currently in the age group of 18-34 years, millennials are known to be radically different from their predecessors, Gen-X, owing to an assertive approach to life. Driven by a zest for life, millennials seek instant gratification and live for short-term pleasures. The urge to pursue their passion and live in the present is what drastically sets them apart from the previous generation.
Generation-X, born roughly between the mid-60s and late 70s, focused their energies towards finding security and stability in life before opting for “exorbitant luxuries”. This thought process and difference in priorities, which might be considered unconventional, is what makes millennials very different from Generation-X.
The world we live in today is a very different world from which Generation-X grew up in. In those days, living in a joint family and fulfilling responsibilities played a major role in people’s lives, necessitating job security and safe investments. Millennials, on the other hand, have grown up in an environment where technological advancements have shaped their surroundings and continues to do so. An ever-changing world around them has redefined this generation’s aspirations and made them more independent as well as impatient.
The difference in mindset is clearly reflected in the spending and saving habits of these two generations. Major financial goals 35 years ago included owning a house, some real estate, a car, and having a substantial amount of money to secure the needs of the family. Investments were usually made conservatively, based on the amount and guarantee of returns. Fixed returns, in the form of Provident Funds and Bank Fixed Deposits, were popular options that assured a surplus amount of money being generated on maturity.
While Generation-X swore by the power of saving money, millennials look forward to experiences instead of acquisitions by liberally spending money on travel, entertainment, and pursuing interests. This is drastically different from Gen-X, which considered spending on things like travel to be exorbitant and avoidable. They also tried to avoid taking loans and paying interest on borrowings. Millennials, however, with their desire to seize the moment, make purchases extensively on credit and spend a large chunk of their income paying off debts through EMIs.
This affinity for credit does not afford millennials the financial stability enjoyed by their predecessors and delays them saving for long-term financial goals such as retirement plans and children’s education. Since this is a generation that will shape our economy, a trend towards delayed savings must be checked to ensure that difficulties do not arise in the future.
Being a generation that thrives on information and awareness, making some smart investments, along with subscribing to Systematic Investment Plans (SIPs), should serve the interests of millennials optimally. Opening a basic savings account and using it to manage resources could go a long way in securing a degree of financial stability for the future.