Despite negative stereotypes, millennials tend to prioritise spending over saving, according to a recent survey.
Millennials, also known as Generation Y, are born between 1981 and 1996, meaning they are currently aged 23 to 38.
"Contrary to popular belief, millennials are saving," says Pat Magadla, Senior Business Development Manager at Old Mutual Investment Group.
A 2019 survey executed by Old Mutual Retirement Savings & Investments Monitor found that millennials' financial priorities lie in saving, investing in their education, and buying homes.
Among 18 – 29-year-olds, 44% are saving for an education, and 27% are saving towards buying a home, the survey found. According to Magadla, although this age segment covered Generation Z (the younger group) as well as Millennials, it indicates where priorities lie.
"This shows that millennials place more importance on education and playing asset catch-up in the form of wanting to own a home," Magadla says.
Meanwhile, a 2018 study by the US Federal Reserve found that millennials spend less than baby boomers (those aged 55 – 73). According to Magadla, earning less has given millennials key budgeting skills, enabling them to be more aware of their spending habits and heightening their focus on getting more bang for their buck – or making the most of every rand they spend.
Skills to share
Nearly half of the millennials surveyed on the data from the Old Mutual Retirement Savings & Investments Monitor have savings or a retirement annuity. One in five invest in shares or unit trusts, and 65% have life cover.
Magadla believes there are valuable financial lessons that can be learnt from millennials.
According to her, millennials have the right idea when it comes to investing.
"For this age group, sustainability has become part of their core values. Millennials are not afraid to put their money where their hearts are, but they don’t have to sacrifice favourable investment returns because of this," explains Magadla.
Additionally, Magadla believes millennials have an advantage in being tech-savvy.
"Millennials are one of the most resourceful generations when it comes to using technology.
"Not only do millennials use technology to order food, transport and do online shopping, they also use technology to manage their finances. There are a wide variety of budgeting applications and financial tools that millennials are becoming increasingly savvy about using. Financial information has never been this accessible," says Magadla.
She uses the example of 22seven, Old Mutual's secure app that automatically generates a personalised budget based on actual spending.
Other popular apps in South Africa include MoneySmart and Nedbank's MyFinancialLife.
Magadla believes that while each generation has their own understanding of the financial world and lessons to be learnt from their experiences, millennials are more financially savvy than many give them credit for.
"It is worthwhile to sit up and note how different behaviours and attitudes can impact investment outcomes, no matter your age," she says.