For those of you who don’t know, Generation Y, or The Millennials, is made up of those born sometime between the early 80’s and the mid-90’s, whose childhood memories include Sega Genesis, Furbies, and Sno-cones, whom it is said will only take ‘yes’ for an answer, or expects to be rewarded for even the smallest achievements because their parents doted on them too much when they were children.
They’re also the generation that people have predicted will likely crash and burn when it comes to personal finance if something doesn’t change and they don’t learn the ins and outs of good money management before they’re buried in debt and penniless.
As much as
I’d like to say that as a member of said generation I am offended by society’s
lack of faith in our personal finance skills, I’ve gotta say I can’t he
lp but
agree with the naysayers that many of us from Generation Y have got a lot to
learn. I’ve met my fair share of mid to late 20-somethings whose financial
planning consists of how much money they plan to spend at the bar on the
weekend, or who think frugal living is akin to cruel and unusual punishment. I
also know this isn’t true of everyone from Gen Y or that all hope is lost and that
we can’t become more personal finance and frugal living savvy.
The first time I stumbled upon the blog, Young and Thrifty, written by a fellow Millennial generation Canuck who writes under the pen name Young and Thrifty, I couldn’t help but feel optimistic for the future.
Young and Thrifty says she started her site after realizing that a lot of people her age either knew very little when it came to money management or who were royally confused; some friends, for example, thought an RRSP was a mutual fund and she says her sisters, at one point, didn’t know the difference between a credit card and a debit card. Young and Thrifty very aptly gave her site the slogan, “Saving Generation Y.”
“I didn't mean for ‘Saving Generation Y’ to sound so pompous, but I just thought it was somewhat catchy at the time,” she explains. “I do think that generation Y does need a bit of help though (or more like a kick in the pants?). We are so accustomed to instant gratification. Most of my friends have zero savings and don't understand the importance of personal finance and money management. That being said, most of my friends are not in debt, which is good, but that's not the case with other generation Y's.”
Really, I don’t think there’s anything further from pompous than starting a site and sharing what you’ve learned about personal finance, investing and saving in a way that people the same age can understand and apply in their own lives. Sometimes you’ve got to be cruel to be kind and if inferring that Generation Y needs saving or a bit of fire under the rear ends to get with the program, then so be it.
When asked why she thinks it is that Generation Y seems so less-equipped when it comes to the knowledge and tools that are needed to make smart financial decisions, Young and Thrifty says it’s because few people her age learned about personal finance or frugal living in school, which meant the onus was on their parents to set a good example and to prepare them for the future when they’d leave the nest. For some, this meant there would be a steep learning curve as they were used to getting what they wanted when they wanted and had few, if any, financial responsibilities.
“It doesn't help any when your parents are giving you a new iPad every time one comes out, or if they buy you those $200 jeans because everyone else has one,” Young and Thrifty says. “I think it (money management) stopped being general knowledge when our parents stopped making us work for our money. This is changing though- they are incorporating more and more personal finance education into high school, which is very promising.”
With regards to future generations, Young and Thrifty says school curriculum that teaches students the basics with regards to saving, investing and credit will likely make for cohorts of young adults that are less keen to rack up student and credit card debt, who know how important it is to save for the future and to have emergency funds, and who don’t take money for granted.
“I think one of the solutions to this problem is to incorporate it into standard high school or even elementary school education,” Young & Thrifty says. “For example, people had iffy compliance with wearing seat belts 10-20 years ago. They started incorporating this education into school, now the children go back to their parents and teach them to wear seat belts. Compliance with seat belts is fantastic now. Many parents may have trouble teaching their children to be good with their money, it can be a difficult subject to talk about, especially if the parents feel their money isn't managed that well--they may feel like they are not equipped to teach on that subject.”
But Young and Thrifty doesn’t think it’s too late for Generation Y. If
she did, she wouldn’t dedicate what is obviously a great deal of her time to writing
posts like, Save or Invest for Short Term Goals?, or Investing in a
TFSA as a Student, for the benefit of her fellow Mellennials. Young and
Thrifty says she thinks the key to turning our bad habits into smart and
lucrative money management know-how will be using the technologies of our time
and educating ourselves.
“I don't think we need to necessarily hit rock bottom (though that certainly helps!),” she explains. “I think we need to educate ourselves-spread the word that no, we DON'T need that new pair of shoes, and that we SHOULDN'T put it on our credit cards because we won't be able to pay for it later. I think blogs and sharing information is a great source of inspiration for change.”
That’s precisely why Young and Thrifty is such a must-read for those from Generation Y who are trying to muddle their way through what can be unfamiliar waters. Young and Thrifty’s posts are totally geared toward the financial topics and questions that matter most to Generation Y, no matter how much or how little knowledge they have about money.
When you visit Young and Thrifty, you would never guess that there was a time when this young woman didn’t know a lot about what she should be doing with her money, but Young and Thrifty says it’s been reading the personal finance, frugal living and other money-related posts on fellow bloggers’ sites, as well as writing nearly daily entries for her own site, that have motivated her to learn more about smart investing, the dangers of debt and having a solid savings plan. With her blog, Young and Thrifty has become a mentor and a source of inspiration for others her age.
Technology continues to change the way we carry out our day-to-day tasks and, just like few of us still mail in cheques to pay our bills or deal solely in cold hard cash, it makes sense that the Internet and other forms of technology have become important tools for learning about personal finance and frugal living. To me, this is very promising for Generation Y and those who follow. Gone are the days where financial futures depended largely on whether or not mom and dad had debt or any savings for retirement, or whether or not you were lucky enough to learn anything about money in school.
Now, young adults can easily glean lessons in personal finance and money saving tips from others in cyberspace. From others’ examples, they can learn that one of the best ways to leading a life that is fulfilling and rewarding is through fiscal prudence, prioritization and careful planning.
“You can still live life to the fullest and be financially responsible,” Young and Thrifty says. “You can still love life and be responsible. It's all about balance, I think. Of course no one wants to deprive themselves and work like a slave for X number of years until retirement (well, that's the Gen Y mentality that I share, anyway!). For example, I'm a travelaholic, but I'm still incorporating travel even though I have mortgage debt now. It’s about prioritizing and cutting out the stuff that isn't important (for example, eating out at lunch or having daily lattes is NOT important to me. Therefore, I don't spend any money on that stuff. Instead, I use that money towards traveling. I say that having X amount of dollars towards your different goals (e.g. travel goal, retirement goal, TFSA goal, home goal etc.) is a good way of balancing.”
Now we just need to get to the point where young adults Tweet about their savings, dividend investing, buying ETF’s, and how they didn’t just buy that $300 pair of shoes or latest Apple gadget.
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