Common Financial Habits of Millennials
It’s impossible to read and analyze anything about the current shift in the workforce and what it will look like in the coming years without considering the mentality of millennials. Millennials, broadly defined as those born between 1981 and 1996, grew up in a world that looked much different than their parents. As such, it is no wonder that they make for a different type of employee, and the way they impact the market is unique from their predecessor generations.
So, as an employer or business owner, we’ve listed some unique financial habits of millennials that we think you should know.
Investing with their values
A growing trend with millennial investing is the focus on investing in areas that align with their values. Since they came to age during multiple periods of economic turmoil, such as September 11, the 2008 market crash, and the current economic fallout from COVID-19, the idea that any single type of investment will guarantee them the return they need is shaky at best. But given that they still see the importance of investing, this leads to a situation where they figure they might as well invest in a way that matches their values. This could mean putting their money in more ‘green’ funds that encourage divestment from fossil fuels, refusing to invest in funds or companies who cause issues with worker rights or utilize child labor overseas, or it could even mean investing in companies that are creating products that are going to create a better world. As previous generations may be more focused on the bottom line, millennials see investment as a vehicle to send more of a signal.
Prioritizing purpose & quality of life
Millennials tend to place less of a priority on the direct salary they earn from their job and put more weight on other aspects of their career. Many millennials will gladly change jobs if it means they can work for a company whose purpose and mission motivates them. Similarly, previous generations would look to employee benefits, like bonuses or 401(k) plans, to boost their compensation package. Still, millennials are more likely to place a premium on the quality of life benefits, like additional vacation time, flexible working hours, ability to work from home, and other benefits that improve their day-to-day life.
Keeping Up with the Joneses
Millennials are mission-driven, but when it comes to their treatment of money, this may not be a good thing. One of the negative trends that experts are noticing is the prevalence of social media has created an increased pressure to keep up with their peers, spending and acquiring purchases, excessive travel, and more. This pressure to have the same type of car or house as their friends, regardless of their means, leads to dangerous spending habits. This could lead to credit card debt, being one missed paycheck away from disaster, and an inability to save for the future.