The idea of the American Dream was first developed by the Founding Fathers, who declared independence from England based on their belief in unalienable rights. They believed that people inherently have the right to life, liberty, and the pursuit of happiness. Their goal was to create a country where everyone could live the life they wanted, regardless of their origins of birth. Over time, it came to be known as the American Dream. However, that dream has changed now.
With record-breaking inflation and unaffordable housing, the struggle to achieve the American Dream has evolved, making it much more difficult for millennials to attain it.
Since the early 2010s, Millennials (26-41 years old) and their careless spending and saving habits have been stereotyped. The oldest members of this generation, now entering their 40s, are breaking out-of-date perceptions by using lessons learned after experiencing past financial crises.
To set the record straight, We’ve compiled a list of the top 5 financial wellness clichés about millennials critics need to avoid.
Stop Eating Out to Save Money
Eating in or eating out? The millennials have a love for restaurants. A survey by Bankrate found that 54% of millennials eat out at least three times a week. You may think that’s because millennials like to throw their money around, but it’s not quite like that. (Abrams, 2019)
Comparing this trend to their parents, who advise cooking food at home, millennials seek convenience and affordability more than anything else. And surprisingly enough, the food industry has evolved to offer cheap and ready-made meals for the hungry belly.
It's conventional wisdom that eating at home will save you money. However, according to the Labor Department, grocery prices rose by 13.1% in July from a year before, whereas restaurant prices were up 7.6% in comparison. So while careful grocery shopping might still save you more, there are plenty of restaurants that can provide convenience and affordability as opposed to spending money and time at home to fix a meal. (Lazarus, 2022)
Additionally, the millennial generation is more social than ever. The rise of social media and Instagrammable spots has changed the food scene into an experience. Many millennials eat out because they want to socialize or are too busy to cook at home.
Save Now, Enjoy Later
To spend or not to spend? The concept of delaying instant gratification might not ring true, especially for the millennial generation. Terms like YOLO (You Only Live Once) emphasize living in the moment and making the best of it. After all, the future is never promised.
It’s estimated that 55% of millennials aren’t prioritizing saving for retirement, which experts think might be a smart move. A recent survey from a financial services company, Fidelity, found that 55% of 18- to 35-year-olds have stopped planning for retirement since COVID hit, and 45% don't see the point in saving until things improve. In addition, 39% now expect to retire later than planned to cover the financial setbacks caused by the pandemic. (Sauer, 2022)
Part of the reason for this trend is that young people in America are in a tough financial situation right now due to student debt, rising housing prices, and 8.6% inflation. Given the scenario, it might be a good idea to avoid putting your money into an unpredictable market and wait until it stabilizes. Especially with concerns that inflation might outpace savings rates, younger generations might be more inclined to spend more than save.
The younger generation is more financially aware and has a more active approach to financial wellness. Ditching the age-old cliché, millennials believe that by smart planning, they can do both – save money AND enjoy their lifestyles at the same time.
Live Below Your Means
"Live below your means" is not always the best advice when it comes to financial wellness. While living below your means may be necessary in some cases, it is not always the best approach for achieving overall financial security. There are other ways to save money and still live a comfortable life, and relying on this mantra can actually lead to financial insecurity.
One way to achieve financial wellness is by focusing on saving smartly on your expenses instead of not spending at all. Iona Bain, who is an expert on millennial money matters, advises on focusing on your outgoings to save better. She says:
“I would recommend tackling what I call “the easy wins”. So make sure you’re on the best possible plan for your energy bills, your mobile and broadband contracts, and your insurance. You can either haggle with your existing provider, or switch to cheaper alternatives.”(Powell, 2022)
Millennials are transforming this advice to “live within your means” and seeking smarter ways to save money to keep up with the financial pressure without greatly sacrificing their current lifestyles. For example, 55% of millennials have delayed their plans to buy a house to combat the high cost of housing. Compared to previous generations, millennials now spend 16% less on alcohol and 71% less on cigarettes. Finally, public transport and private health insurance saw the biggest increase from millennials, 24% and 23% respectively. (AlphaBeta, 2021)
Save for a Rainy Day
While setting money aside for unforeseen circumstances is a good idea, the truth is that it is not realistic for many. Also, how much money should be set aside? Some say 3 months, some say 6 months of expenses, while others argue for more.
The reality is that almost half of Americans (47%) don’t have enough savings to cover unexpected costs. Couple this with living paycheck to paycheck, and you get the picture. It’s worse for millennials, whose savings got eroded during the pandemic. In the years before the pandemic, millennials actually saved more and avoided debt better than older generations due to growing up during the dotcom bust and financial crisis of 2008. (Cohen, 2022)
However, it’s not all grim, as 57% of millennials believe their financial situation will improve this year as they find new jobs, pay down their debts, invest smartly, and budget, per the MoneyGeek survey. (Gordon, 2022)
The millennials are also at a better advantage of obtaining help for their personal finances via the surge of financial wellness tools that are now available to them. For example, on-demand pay is quickly gaining traction among the younger generation as a means to withdraw their earnings daily or as needed. It’s estimated that 91% of millennials want their employers to offer it, and 84% of millennials who have it use it to cover financial emergencies. (Elone, 2022)
Stick To One Job
To think that millennials are not loyal to their jobs is not true. As the pioneers of the Great Resignation, the millennial generation led the push for better pay, benefits, and treatment across industries.
As opposed to older generations' more conservative advice, the Great Resignation actually created the perfect climate for negotiating a higher salary or applying to another company that offered more money for the same job.
"Being loyal doesn't pay. If you stay at your job for too long, you may be losing hundreds of thousands of dollars because they know you're not going to leave. You can only save as much as you earn, but you can always increase what you earn."(Aquino, 2022)
The millennial generation will be loyal to a company, but not blindly. They stay loyal to companies that meet their personal interests and career goals (which change frequently) and are socially responsible.
It might surprise you to know that as per the Digital Natives Report by Zapier, millennials, on average, intend to stay with their job for 10 years. The younger generations are all or nothing when it comes to job loyalty. As the Digital Natives Report asserts, companies must inspire their commitment in order to succeed. (Perna, 2020)
Simply put, Millennials expect a workplace where they are empowered to contribute to something bigger than themselves. A company culture with like-minded values will enable them to make a difference in the world. Otherwise, they will happily take their talent, energy, and loyalty elsewhere.