Contrary to popular belief, millennials do save, they just do so in different ways, with different priorities in mind. This is according to Pat Magadla, Senior Business Development Manager at Old Mutual Investment Group, who says that, based on data from the Old Mutual Retirement Savings & Investments Monitor, almost half of the millennials surveyed have savings or a retirement annuity, one in five invest in shares or unit trusts and 65% have life cover.
“Priorities for saving and investing among 18-29-year olds are education (44%) and saving for a home (27%). 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 that there are valuable financial lessons that can be learnt from millennials. Below she shares her three take-outs from the themes present in this research.
1. Sustainability is to be taken seriously
Millennials have a reputation for having an increasing interest in sustainable and eco-friendly consumer products. This includes financial products as well as investing to match their values based on Environmental, Social and Governance (ESG) screening. ESG investing has grown steadily over the years and has recently proven to be cost-effective and produce good returns. “Millennials definitely have the right idea when it comes to investing in the bigger picture and being a responsible investor. 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.
2. Be aware of your spending habits
According to a study by the Federal Reserve (2018), millennials spend less than baby boomers (those born between 1946 and 1964). Because they are younger, they earn less. As a result, they have had to learn to budget from a young age. “Millennials are largely aware of their spending habits and focus on getting the most out of every rand spent,” says Magadla.
3. Use technology to your advantage
“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, a secure app that automatically generates a personalised budget based on actual spending.
“While each generation has their own understanding of the financial world and lessons to be learnt from their experiences, millennials are actually 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 concludes.
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