Financial Planning and Gen-Y
Today’s twenty something generation – Generation-Y or Gen-Y as they’re known – are renowned for being optimistic go-getters. Born between 1976 and 1991, these children of baby boomers are often described as being unrealistically optimistic and over-confident about life, particularly around financial matters.
Perceptions are often reality …
Gen-Y are perceived as being happy to rely on ‘Bank Boomer, ‘Family ATM’, ‘The M&D Bank’ to prop up their lifestyle, especially during this economic downturn. With tags such as ‘helicopter kids’, ‘Kidults’ and ‘boomerang kids’, who just keep coming back to their parents for further assistance, Gen-Y are fast becoming “Kids In Parents Pockets Eroding Retirement Savings” – KIPPERS. In the past, our Baby Boomer parents were pretty confident that they could sustain not only their lifestyle but, if things went wrong with their Gen-Y sons and daughters, that they could also help them out. Sadly, for many that confidence is gone, and is no longer a practical reality.
By nature of the year of my birth, I am a member of Gen-Y (only just).
Unlike previous generations, such as our baby boomer parents, credit has been all too readily available and we stand accused of failing to understand the ramifications of our spending habits and potential impact of escalated debt levels, particularly given the effects of the global financial crisis.
Recognised by many as the driving force for tomorrow’s economy, many of our number are financially uneducated and paralysed by debt. Gen-Y has its fair share of entrepreneurs and many have, or are looking to, start their own business. Basic budgeting, business planning and accounting advice will be beneficial in this respect to provide that initial foundation on which to build a sustainable business.
Now with increased unemployment and vulnerability in the economy, Gen-Y has received a much needed wake -up call. It’s great that this wake-up call has been received now, rather than in our early 40 and 50′s … much more time is on our side … I urge you now to take action and review or rethink your current and future financial strategies. I only hope you (Gen-Y) were listening when the wake-up call came and didn’t rollover for another sleep.
It’s undeniable that Gen-Y has a myriad of financial planning concerns. Many members of this generation face strong challenges in turning around their ingrained poor financial habits – including myself before and immediately after my departure from the relative sanctuary of the family nest. Generally speaking our generation’s high levels of personal debt from loans and credit cards are a precursor for low or no savings and few investments. Many focus on the present and although they have goals, they are unable to achieve them due to a lack of budgeting and planning skills.
Earlier generations saved for their first big ticket items … car’s, furniture, computers … but Gen-Y have been able to finance such purchases using alternative sources. The imperative to save no longer seems to exist. Gen-Y seems comfortable with debt, holding the attitude that they’ll get around to paying it off later, a stark contrast to previous generations who were very cautious of getting into debt. Their caution is a result of experiences from times which weren’t quite as prosperous as those experiences of Gen-Y.
Perhaps, it’s not all Gen-Y’s fault … as it’s been easier than ever before to go into debt … am sure you all would have received the offers from the banks congratulating you for being ‘approved’ … But, just because you can have something, doesn’t really mean that you should … it’s the age old “Needs” vs “Wants” debate.
There is little formal education for adolescents on essential life skills such as looking after personal finances, however being techno savvy, Gen-Y can generally access vast amounts of information online. Making sense of that information can be somewhat of a challenge.
Financial Advisers can play an active role in helping parents pass on tools, skills and experience to their children. Financial Advisers can in many cases take a step away from purely numbers and progress more into financial counselling than financial planning.
My kindred members of Gen-Y I urge you to learn systems, processes and strategies that work for you. What works for one person will not necessarily work for you. Seek, value and obtain good advice. Often an hour or two of time spent in general coaching and counselling can be enough to get or set someone financially on track.
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Dan Smith is a self employed Financial Planner based in Rockhampton. He has clients in various locations throughout Australia but predominately in Central Queensland and specifically the geographic area encompassed by the Rockhampton Regional Council.