Vijay Valecha, Special to Arabian Business June 17, 2021
GCC millennials tend to be higher spenders than their global peers, particularly in high-value segments such as travel, but saving isn't their forte.
The millennial generation entered the workforce during the worst downturn since the Great Depression. Saddled with student loans and stuck in low benefits, the generation is now entering its peak earning years during an economic cataclysm. After accounting for the present crisis, an average millennial has experienced slower economic growth since entering the workforce than any other generation in history. It is essential that the millennial generation must be well-rounded with skills and tips to manage their finances.
Across the GCC, millennials account for a large percentage of the population. GCC millennials tend to be higher spenders than their global peers, particularly in high-value segments such as travel. No doubt, staying in the land of luxury, it is only normal for young individuals to get side-tracked from their monthly budget and get carried away with indulging in activities they watch others pursue on social media. Such distractions often lead to the postponement of planned aspirations due to a lack of funds amongst millennials. Thus, it is a matter of growing importance to UAE for its millennials to be of a sound mind when handling their finances as they account for the country's highest proportion. Their accountability to manage money must not be overshadowed, with the best lifestyle being available in their footsteps.
The generation of millennials is unique from the prior generation. From vividly remembering 9/11, watching the Wall Street crash of 2008, and surviving the Covid-19 pandemic in the prime years of their career, the generation understands that the road to success is filled with speed breakers. However, despite having lived through several rough patches, only 24 percent of Gen Y are financially literate. Below are five tips for millennials to consider as a start to being less oblivious to future planning and more financially educated.
Steer clear of social media
As per studies, millennials do not enjoy sitting through a 30-minute or an hour or full-day seminar on finance-based topics and are more inclined to fun and easy ways to digest and expose themselves to such content. However, soaking financial advice from social media platforms may not be a wise decision. Trends on TikTok are not just limited to travel, memes, and lifestyle anymore. Hashtags such as #fintok for videos that provide financial advice have received an increasingly high audience lately. In the world of meme stocks with aggravated volatility, it is easy to act on advice that appears catchy. Still, the information provided may not always be accurate and may be painted with a rosy brush.
Control your fear of missing out (FOMO)
According to data from the 2019 US Financial Health Pulse consumer survey, only 24 percent of millennials are financially healthy. This wealth gap of the generation is worrying and summarizes that millennials of this day and age cannot divide their pay checks between spending and saving with stability. Segregating ones' needs with wants is essential to achieve financial stability. Preparing a budget for today and setting milestones for tomorrow is an excellent way to manage sustainable living in the present without delaying future aspirations.
The time is right
Millennials are currently between 25-40 years of age. These are the most productive years of ones' lifetime. Amid the responsibility to earn for oneself and his or her dependents, individuals often forget to park their money in the right assets at the right time. With approximately half of their lives ahead of them and retirement age not yet dawning their career, millennial investors must take advantage of the long-term investment duration while they can afford to. Long-term investments not only reap higher returns but also provide tax advantages on capital gains.
Stay away from bad debt
It is very common for individuals to aspire to buy a nice car or travel the world during the ages range of 25-40; however, the approach to landing a holiday must not be 'toxic' debt dominated. Toxic debt refers to loans and other types of debt that have a low chance of being repaid with interest. Debt is not always bad, but when money is borrowed to purchase assets or buy experiences that depreciate, the interest payments may only financially hurt you. These assets pay no passive income, and the interest is not deductible.
Play your strengths, but patiently
Millennials have become accustomed to using technology for every aspect of their lives, so it only makes sense that digital technology becomes a significant component in their investments, as well. Transitioning from floor trading to online trading has been the most convenient for millennials than any prior generation due to their savvy tech abilities. However, millennials can sometimes be impatient with continuous monitoring of investments and expect quick results, which is not ideal for investing. Patience and discipline are virtues that will benefit all traders, keeping emotion and snap judgments in check. However, allowing patience to turn into stubbornness is something millennials must always guard against.