Posted on: 12th November 2021 in Finance
In general, financial analysts agree that millennials face different financial problems than the previous generation (Gen.X), making it difficult for them to keep up with the lifestyle of their parents. Economists have identified some of the most common financial planning mistakes that millennials make which we will share in this blog.
This is not a millennial privilege, but getting good advice has become even more problematic in the last few years. The internet has made some things easier, giving us access to data that most of us couldn’t even have imagined when we were growing up. Access to such information has changed the way we live, sometimes for the best but sometimes for the worse.
One of the things that torment millennials is mediocre financial advice. Discussing financial planning may tempt us to start searching for more information on that; most of the time the best source that comes to mind is the internet. A lot of advisers share content through various channels such as videos, blogs etc.
However, there is no way to know if the adviser is fully qualified or has the necessary experience to help you make informed decisions. As a result, wrong solutions may lead to loss of funds, stress and anxiety as you deviate from your target.
It is true that millennials have been one of the first groups of adults with access to a real global market. The number of new products that are added to the market every day, whether it is a new car, a top-spec phone or anything similar make it difficult for them to resist temptation. Purchasing various products, even if they are sold by someone on the other side of the world, is easy.
However, a lavish lifestyle has never been and never will be a part of a solid financial plan. The consumer behaviour of many millennials revolves around the “fear of missing out” mentality which leads to large expenses and forces individuals to deviate from their plans and goals.
Data published by Hargreaves Lansdown revealed that 51% of UK adults do not have enough emergency savings. Even worse, the survey showed that “almost one-in-four (23%) households earning over £100,000 a year say they couldn’t cover their essential outgoings for three months.”
Economists suggest that adults who have a job should have 3-6 months’ worth of essential spending in their bank account for emergencies. It is no wonder that many millennials, who have rarely seen their salaries increase, do not have a fund for emergency situations such as becoming redundant or getting sick with a severe illness.
Investopedia’s definition of “financial literacy” is: “the ability to understand and effectively use various financial skills, including personal financial management, budgeting, and investing.” Financially literate individuals are less vulnerable to fraud or potential planning mistakes.
A survey conducted by PwC said that 24% of millennials demonstrated basic financial knowledge when tested on financial concepts. The same survey noted that 30% of millennials overdraw on their checking accounts, whilst 8 out of 10 said that they have at least one long-term debt.
If you feel that you have made some of the mistakes described in this blog, it means that you have realised what could be improved regarding your personal finances. Designing a financial plan is about setting new goals, identifying how you can achieve them and taking action when conditions are optimal.
However, not everyone has the knowledge or the time to make such a plan. Having an experienced, fully qualified financial adviser by your side is the best solution for you. Holborn’s advisers are among the best in the industry, standing out from the competition thanks to their holistic approach. Get in touch with our advisers today by filling in the contact form below. Start building a new future today!
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