Money & Life contributors draw on their diverse range of experience to present you with insights and guidance that will help you manage your financial wellbeing, achieve your lifestyle goals and plan for your financial future.
The spending habits of our younger generation show that experiences mean more to them than buying stuff. So are they better at managing money than their Boomer or Gen X parents? Or is FOMO leading them into the dangers of growing debt? Find out more about money habits of millenials.
For some years, retail businesses have been in a tailspin about the rise of the experience economy. Instead of going on shopping sprees, people are channeling more of their cash into dining out, weekends away and holidays. In 2015, JPMorgan collated data from credit card spending by millenials (those born between 1981 and 1997) and non-millenials (born before 1981). They found 34% of spending by millenials was on travel, entertainment and dining, compared with 28% for non-millenials.
With less emphasis on buying stuff, this could be seen as a welcome minimal movement among millenials. However, with the rise of social media, sharing photos from our latest experience, rather than parading with a new purchase, has become the preferred way of keeping up with the Joneses. “It used to be that our car, or handbag or wallet showed our status,”says James Wallman, a trend forecaster and the author of Stuffocation: Living More with Less. “Now we post Facebook pictures from a chairlift in Chamonix or the latest music festival. Social media is supporting this change. Posting pictures of what you just bought is gauche; posting pictures of something you’re doing is fine.”
The dangers of FOMO
So the pressure to buy, is being replaced by the need to be there, or what’s become known as FOMO, ‘fear of missing out.’ And according to a recent survey by Credit Karma, it’s a fear that’s fuelling financial problems among young people, with nearly 40% of them going into debt to join in on the latest experience with their peers. And two-thirds of millenials surveyed said they regret spending more in social situations than they had originally budgeted for.
If you’re in danger of messing up with money thanks to this pressure to be involved, here are some tips to help you enjoy a fulfilling life without regret:
Automate your cash flow
Our guest contributor James Trethewie Financial Planner AFP® has a great range of tips for getting to grips with being financially independent. Automating your cash flow is one of the key recommendations James has for anyone seeking to stick to a budget, regardless of their age. “Budgets are much harder to stick to when all your spending comes from the same pot of money,”says James. “By directing income into four key accounts you can ensure you’re taking care of everyday expenses and savings with enough left over to pay for the extras without getting into debt.”
Find ways to stick to it
If you’re finding that keeping up with your friends’social agenda is making it hard to keep to your budget, maybe it’s time to start taking the lead with making plans. Coming up with your own ideas for how to enjoy your weekend without spending big or celebrating on a shoestring could help you and your friends get better at living within your means.
There’s no need to limit yourself to getting advice from the blogosphere. If you’re struggling to make ends meet and join in with every social experience that comes your way, chances are your friends are too. Maybe it’s time to break with the tradition of money being a taboo topic and get real with your friends about finances. Sharing some figures from a recent Mamamia feature on how much millenials actually have in the bank could get the ball rolling and encourage your peers to talk openly about what they earn, spend and save.