Saving and the financial security it provides may make people happier than spending, according to the TD Ameritrade Millennials and Money Survey. However, putting aside some money for the future was much simpler for older generations that used to prioritise family-focused expenditure in their 20s. With so much exposure and increasing peer pressure, millennials have no other option than to spend more than they earn. According to the survey, about 82 percent of millennials are saving for experiences other than retirement, home or family. This is a generation that saves to spend on themselves, primarily on technology, travel and luxury experiences.
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India, today, has the largest section of its population in the millennial category - a well-travelled breed that is focused on gaining experiences rather than hoarding money. They revel in a carefree lifestyle and take pride in their sophisticated tastes.
The times have changed drastically over the past few decades, and today, the younger generations reside in a reality where maintaining one’s lifestyle quotient is very crucial. They think highly of themselves, and their need to create a reputation and social image comes first. With such modern thinking comes a modern lifestyle. Social gatherings and parties are a matter of course, and spending on them becomes a matter of class and status.
With e-commerce booming in the country, everything is available on the go. Millennials have become the key age demographic for online retailers. When it comes to retail spending, 69 percent of millennials surveyed admitted to indulging in impulse purchases. It is estimated that, on an average, millennials spend about Rs 10,000 in a month on retail therapy, regardless of income group.
Social media and pop culture are another category that influence millennial lifestyle decisions. Binge-buying is also a result of a non-stop feed of updates that attract the attention of these heavy spenders.
The charm and excitement of youth is intoxicating; the average youth of today is heavily inclined towards travel, and a major chunk of his/her income is spent in the travel and hospitality sector. Today, Asia is home to at least sixty percent of the world’s millennials, who are expected to reach their peak of spending power in the next decade. A survey done by the Singapore Tourism Board revealed that 64 percent of this group opts for completely independent travel arrangements on leisure trips. Sabre’s Vice President, Sarah Kennedy Ellis, has claimed that the trends show that, by 2018, millennials will become the hotel industry’s most important and valuable market.
Investing is the key when it comes to saving up your money for the future. The millennials seem to lack interest in this area. Another key aspect is retirement saving. A Bankrate survey found that in the age group of 18 to 29, almost 69 percent of people did not have any idea about retirement saving plans or investing in mutual funds. A similar attitude is seen when it comes to insurance. Health insurance, if not provided by the employer, is hardly thought of.
All these point to a concerning trend. While millennials gain experiences through their profligacy that their seniors never had, the imbalance between savings and expenses seems to be a recipe for disaster down the road.
What are your thoughts on the matter? Is there a middle ground somewhere than can allow one to enjoy adventure and novelty while at the same time ensuring financial security? Do let us know in the comments section below.