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Insurance Article

Are Millennials Better at Planning Their Finances?

May 16 2017
Millennials are planning their finances

When it comes to planning finances, millennials outperform their adult counterparts

Millennials may seem to be busy in building careers, planning families, and carving out a niche for themselves in the world. However, the importance of early financial planning is apparently not lost in Generation Y. In a 2014 survey conducted by Fidelity Investments, 39% of millennials admitted that they worry about their finances at least once a week.

The ‘Time’ Advantage

Millennials are aware that they should be doing something about their finances to get them in the right direction and gain a financial stability in their lives. However, they are paralysed by the amount of choices that they have right from opening a bank account to choosing their insurance provider. It’s difficult for them to know where to begin.

However, the biggest advantage that Generation Y has is ‘time’. They have time to save towards both short-term and long-term goals. They have time to make early investments, clear all debts, plan, and work on making a prosperous future. They have the time to start proactively and plan their retirement early on. They have the power of time, which Generation X has lost behind.

Technology Is Friend

Gone are the days of traditional bank accounts and setting aside savings under your mattresses. Millennials today rely on websites and mobile apps that help them take smarter money-saving decisions. They prefer buying goods and groceries from online stores that let them avail exciting discount coupons. Saving becomes far easier when you know how to stack discounts.

Millennials also don’t hesitate in consulting a financial planner. With online financial planning, it is far more easy and affordable for millennials to get consultation on their finances at their own comfort. Besides, they also spend a good amount of time researching for products and services, comparing their prices, before making the final purchase.

Millennials vs Non-Millennials

When it comes to financial planning, millennials refer to various sources of information available to them thanks to the digital age. They prefer consulting certified financial planners or turning to Google for advice on finance management. The preceding generation on the other hand did not have this luxury. Information today is much more readily available that can be acquired quicker than it was a couple of decades ago.

One of the best ways to grow your money and be better at managing your finances is to become a well-informed investor yourself. Numerous sites offer a wealth of resources on a wide range of topics on financial management targeted at millennials. These resources help millennials to cut down their unnecessary expenses and start investing in a diversified portfolio of funds, stocks, bonds etc. These resources were almost non-existent a couple of decades ago.

And The Winners Are Millennials!

In a recent survey by Aviva Life Insurance, it was found that Millennials were clear winners when it comes to financial planning. The survey measured and scored respondents on two factors, the Dream Index and the Plan Index. The Dream Index took into account whether the respondents had an estimate of time horizons, expenditure amounts involved, a clear articulation of life goals, and an awareness of the different financial assets that can be used. The Plan Index, on the other hand, represented the firm actions that people took to achieve their goals.

It was found that the respondents aged between 25-29 years of age scored 31 out of 100 on the Plan Index, whereas, those in the 36-45 age group scored only 16. The result could be attributed to the fact that millennials are more aware of the current global trends and developments than the previous generations. The preceding generation on the other hand has merely been a victim of its underdeveloped time and nascent global market scenario.

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