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Millennials are on track to manage their finances for long-term success
Perception is reality, or so the saying goes; but does that always apply? Like previous generations, today’s young people have had to struggle against commonly held perceptions. Time magazine, for instance, published an infamous cover piece in 2013 dubbing millennials as the “ME, ME, ME Generation,” reinforcing perceptions that this group is entitled, lazy and narcissistic. Maybe the intervening years have changed that, or maybe the perceptions were actually misperceptions all along.
Yes, 18-to-35 year old millennials are marching to their own tune. But they’re showing an intelligent, albeit different, approach to winning at the game of life.
As the most-educated generation in American history, millennials have been burdened with student loan debt, and have been working to pay off their obligations. Many are taking what they believe to be a prudent course by waiting till later in life – when their finances have improved – to buy homes, get married and start families.
A forward-looking group
Millennials are planning for their future and, on average, start saving for retirement at the age of 22. Many believe Social Security will not be there to provide a viable income stream when they retire, so they’re investing in 401(k) and 403(b) plans, Roth and traditional IRAs, and other retirement vehicles. They know that time is on their side and that investing early in life gives them the benefits of compounding returns.
They have also shown a keen interest in putting down roots and staying in one place for longer periods of time instead of moving from home to home as previous generations were wont to do. In fact, in 2016 millennials moved to new residences at a lower rate than any similar group in more than 50 years.
New study confirms millennials plan to stay put – and improve
Further underscoring the point is news from LightStream’s 2017 Home Improvement Survey, which shows that millennials are planning home-improvement projects this year at a rate well above the national average. Sixty-nine percent of millennials say they will be spending money to add patios, decks and new landscaping features to the exterior of their homes, or will lay out cash for technology upgrades or interior remodeling of kitchens, bedrooms and bathrooms. That number represents an increase of 25 percent from just three years ago, and signals a major shift in thinking among millennials, who have historically lagged far behind other age groups when it came to funding home renovation projects.
Judging the results, not the methods
It is noteworthy that 60 percent of those polled, inclusive of all age groups, plan to pay for their home renovations out of savings, versus credit. For millennials that number makes perfect sense. Many in that age group have eschewed credit cards and other credit facilities while paying down obligations incurred for college expenses. Many have adopted personal financial strategies that are debt averse and wealth building, thus some will consider big-ticket purchases only when extra money is in the bank to pay the tab; an approach that is certainly reasonable and responsible.
For a generation that has been chided as one where “everybody gets a trophy,” it looks like many are not expecting a prize to be handed out in real life. Instead they’re making it on their own. Maybe it’s not following a traditional model, whatever that may be, but they’re doing something right.
Perhaps it’s about time the negative misperceptions of millennials were put to rest.