Explicitly talking about America, the millennials have experienced any generation’s most uncertain economic future since the Great Depression.
The Great Recession (which laid off more than 15% of people in their early twenties) followed three decades of stagnant wages, and the income and wealth gap between the rich and the middle class has been the widest since 1941. Millennials face wage stagnation as a 20-year trend of limited labour market mobility has resulted, although the labour market has improved in recent years. Labour mobility began to decline in 2000 as older millennials entered the job market. Employers have more bargaining power when employees don’t change jobs from region to region, a scenario known as monopsony, meaning they are paid less.
It is difficult for young people whose careers coincided with this trend to compensate for the loss of income in the first slack years. If later payments are lower, the effect of low income is initially magnified, and people can save and invest less to generate revenue in the future.
Combine this financial reality with the still high generational debt (mainly student loans), and you have the ingredients for a major economic disaster. Many millennials fear that they will not achieve their life goals, such as finding the perfect job, owning a home or retiring much later than previous generations, while still being labelled as materialistic, spoiled and saturated.
Having Life Expenses.
The growing gap between rich and poor means that the younger generations start with lower household incomes—the most common personal finance priority: having enough money to support yourself daily. With the job market sluggish, some millennials have put their jobs to college or earn additional degrees. Others settle for part-time or “concert” positions; Not surprisingly, others who land full-time jobs find lower-level, lower-paying jobs. Therefore, they are more concerned with the present than the future and have a tricky time budgeting for other financial goals.
Being Financially Independent
Not receiving financial support from parents is one of the defining characteristics between adults and children. Living from paycheck to paycheck, as many millennials do, doesn’t make it any easier. However, gaining independence should be motivated by income rather than savings. While it’s never wise to spend lightly, reducing the consumption of Starbucks won’t make you a fortune. Building wealth requires broader long-term thinking.
For example, if you are making $ 30,000 a year, raising a lot of money is almost impossible, even if all had to save all their extra pennies. By focusing less on being tight-fisted and more on increasing your employability, for example, through education or work experience, you can improve your value and broaden your income horizons.
Planning for the Future
You would think retirement planning would be easy for this young group of parents and grandparents who have struggled so much with recessions, money savings, and real estate booms and recessions. It should be noted that Social Security and occupational retirement plans are no longer reliable options for retirement income, especially the latter, as private employers eschew defined benefit plans in favour of defined contribution plans such as 401(k) plans, which change much if not all of the payroll tax. But they are behind.
The way pension plans are structured today makes it difficult for young people to save money: contributions are voluntary, tied to your employer, and if you are lucky enough to have access to one of your employers, in fact, with the plan provided, you have a greater chance of your employer contributing (today, a company contribution of 5% of the employee’s 401(k) contribution is considered a big deal, far from the 100% provided in the 90s were characteristic of parts). In addition, the wear and tear of economic and social safety nets over the past 40 years has made old-age provisions vulnerable to emergency admissions.