How Millennials Save Differently From Their Parents
A new generation always differs from old generations in many ways but never was a new generation so unique from its previous one in such a noteworthy way than millennials, also called Gen Y who were born between 1981 and 1996.
As the world moved on from landlines to smartphones, Gen Y moved on from the financial pieces of advice which were mostly applicable for Gen X who was born between 1966 and 1976.
One of the parameters on which Gen Y is so different from Gen X is their pattern of saving money which has a significant impact on the economy. In a country like India, workforces comprise 47% of millennials who start saving at an early age of 24 investing almost 40% of their income and spending almost 50% on apparel, entertainment, travel, or leisure.
The significant way in which Gen X differs from Gen Y is because of their saving approach. Where Gen X is only about building assets, Gen Y is about building assets and building experiences. So let’s analyze the difference in saving patterns between Millennials and their parents.
Jewelry
Traditionally, parents looked at jewelry or gold as the safest way to invest and of an eminence. However, for millennials, mutual funds, Systematic Investment Plans (SIPs) are a much safer way to invest leading to a drop in demand for gold.
Real Estate
Millennials don’t like being confined in one place or one city, so whereas Gen X preferred to settle down, Gen Y, not so much. Gen Y keeps on moving from one city to another for their jobs and hates paying EMIs on huge loans, so they prefer to rent a property rather than investing in it. It also gives them the liberty to rent nearby their workspaces to avoid long commutes and traffic.
On the other hand, even if they do invest in properties, they are more likely to keep it as a vacation home or use that for rental purposes making that a fixed source of income. Gen X, on the other hand, prefers to have a roof on their head which is considered a big achievement of their life.
Travel and Leisure
Travelling has now become a part of our life, a part where a major chunk of an income goes to. Millennials these days have reasons like bucket lists, bachelor/ bachelorette parties, destination weddings to take up traveling. A study shows that millennials use 30% of their income for travel and leisure which can take a serious level of financial saving.
Investment/ Saving Schemes
Where Gen X used to go for Fixed Deposits, Post Office Saving Schemes, Gen Y goes for Mutual Funds, Equity, SIPs, and Unit Linked Insurance Plans (ULIP). Millennials are not satisfied with saving money just for emergencies, they like watching it grow simultaneously. Thanks to advanced technology, Gen Y now has several financial apps on their fingertips to track the growth of their investment.
Education
Out of the millennials population 47% of those admitted to saving their money for their children’s education or on their own higher education. Millennials these days are required to enhance their skills to keep up with the fast-paced work environment. Gen Y likes to invest in technical and vocational sources of education throughout their career as opposed to Gen X who just made a one-time investment to become a government officer, engineer, doctor, or CA.
Health
India is a country with the world’s largest millennial population and they are increasingly getting conscious about fitness and their eating habits, says a report by Deloitte. Gen Y is now heavily investing in gym memberships, health supplements, insurance plans, organic food, which is much more than Gen X ever did.
On Last Thought
Every generation has different goals, different needs. Millennials have a lot to choose from thanks to the exposure to online marketplaces, savings, and investment products. Millennials are a generation wanting to create a balance between spending and saving, health, and traveling. For Millennials, the true challenge is to differentiate between their needs and wants, where Gen X was aware of their needs such as securing a roof. But millennials today have a lot more options to explore which is why their way of saving differs from those of their parents.
