Financial literacy is one of the largest topics on online platforms. So much so, that not only are digital media publications taking an increased focus on improving financial education, but so are educational and financial institutions.
Never mind all the financial blogs delivering content to serve that purpose. Clearly, there is a demand and this demand has caused millennials to be more aware of their financial habits.
This generation is now the largest generation in the U.S. workforce and with that, comes great responsibility. As this generation continues to progress in their respective careers, the obligation toward money management becomes greater when thinking about the future.
What is notable is how millennials spend, that play a key role when making financial decisions.
The great news is that their attitudes are very positive. According to a TD Ameritrade survey, 62 percent of millennials identify themselves as savers, and 80 percent say they budget their money. However, millennials are also facing high student loan debt that prevents them from really growing their savings to outpace inflation.
Despite factors that include high cost of rent and student loans, millennials are saving in efforts to not only provide some cushion for an emergency, but to try and aggressively pay down debt. This can feel like saving, let alone investing whatever is left, to feel even more difficult.
In turn, high fixed personal expenses have caused creativity to maximize income among young working professionals.
Many have resulted to making smarter spending, more informed decisions.
The Smarter Spending Formula
The two fundamental pillars of smarter spending are well known:
- Maximize income
- Optimize spending
Life sometimes comes in the way and emergencies happen, but there are ways where millennials can spend smarter and reportedly have already been doing so.
1. Resale Value
Millennials have reportedly been purchasing products where they know there could be a higher resale value, and it’s not only related to technological devices.
In fact, according to thredUP’s 2018 Annual Resale Report, “The resale market will reach $41 Billion by 2022, growing nine times faster than legacy retailers.”
This is driven by millennials who are more likely to switch to thrift because of environmental reasons. The report also noted 40% of millennials aged 18–24 shopped resale last year more than any other age group.
Clearly factoring in resale value is high on their minds.
2. Shopping Smarter
Besides looking to peer reviews by friends or family before making a purchasing decision, millennials have also utilized their smartphones to scavenge for online coupon codes left and right.
Combine the incredible knack for finding better deals with utilizing e-commerce platforms are all reasons for why big box retailers are facing many closures.
Deep discount retailers are thriving. Dollar stores, for instance, are exploding in growth, with reports like the Dollar General slated to open 900 stores by the time 2018 is over with.
Given high levels of student loans that are a generational problem for millennials, budgeting is vital. Vital to keep track of loan payments, credit card payments and rent.
Millennials have embraced what it means to be living on a budget — 80% is pretty good!
4. Starting Small
Understanding that the little things make a big difference is an important value in life. It’s even more true when it comes to personal finances.
For instance, setting aside $100 per month may not seem like it is much, but it will amount to $1,200 annually before any dividends and interest are earned in an investment account, bringing that ending value to a higher number.
Imagine this small contribution to an investment account while shedding some of those recurring miscellaneous expenses? And achieving some financial goals could happen much quicker.
5. Investing for Values
Millennials have access to a lot of information held right in their pockets and they can make more informed purchasing decisions as a result. This is translating to the types of businesses they are aligning their values with, which creates a personal connection.
Once that connection is built, consumers tend to become investors and for this reason is why values-based investing is growing. It leads to a feeling of positive empowerment feeling like their money is being used to make a difference.
Newday Impact Investing is working connect investors with companies that meet those values. Newday’s Global Impact portfolio invests in companies whose core business addresses at least one or more of the world’s social and environmental challenges, as deﬁned by the United Nations Sustainable Development Goals.
Investing in this portfolio gives a diversified global reach to meet millennials’ values.