Millennials are not saving enough. According to a recent survey by trade teaching company Samuel & Co. Trading, 43% of millennials have no savings whatsoever. This is partly because they prefer to live in the moment, and partly a by-product of an ever-changing society.
Over the past few months there have been many articles about millennials in the media. These have focused on low auto-enrolment rates, the problems this generation face and how advisers should adapt their ways to service this band of 22-to-37-year-olds.
I do a lot of presentations about auto-enrolment to employees of various companies. This in turn gives me an insight into millennials’ views on pensions, savings and their general attitude to money.
One of the most common reasons millennials are unwilling to join a company pension scheme to save for the future is they prefer to spend their pennies on funding their current lifestyle. They mostly spend their money on socialising, festivals, holidays and leased cars. They openly admit life is all about enjoying the moment because they do not want to look back at their lives and have no memories.
Fear of missing out
Here is an example of one such person who explained that point of view to me. Thomas, age 26, works for a technology company, earns £26,000 per year and currently drives a brand new Mercedes-Benz C Class sport. He told me he would rather spend money on having a nice car than put it into a pension because, in his own words: ‘I might never see this pension because I might not make it to 65. Even if I do, at least I followed my dreams and lived for my passions’.
The fear of missing out on luxuries in life seems to prevail over the common sense of having a financially secure future. To millennials, time no longer equals money. It is a limited resource to be spent wisely and actively managed.
Millennials are sometimes labelled as more egotistical, entitled, and self-centred than young adults from previous generations. They grew up in an age where individuality has become more prominent in the social and political sphere, and many parents promoted this by giving them choices from when they were very young children. Many parents have consciously and unconsciously trained their children to expect a lot out of life.
In one of his many articles about millennials, the psychologist William Campbell claims that ‘even when schools, parents, and the media are not specifically targeting self-esteem, they promote the equally powerful concepts of socially sanctioned self-focus, the unquestioned importance of the individual, and an unfettered optimism about young people’s future prospects’.
Another reason millennials are more resistant to saving is because of the nature of work for their generation. With many holding several jobs over their lifetime, auto-enrolment for each becomes seemingly more complex.
Job roles have also changed. I spoke to Ash, also age 26, who currently works for a car dealership. He says many people his age are chief executives of their own companies. While start-up culture is becoming more commonplace, it is also insecure and fuels the ‘you can do anything’ myth over the ‘keeping up with the Joneses’ mantra that previous generations held.
Advisers must understand millennial attitudes to money and the issues this generation face before they can properly engage this generation. Even if this means going back to basics and talking about savings.
Anita Wright is an IFA at Bishops Financial Planning.