Want Financial Advice? Ask the Kids

“Kids! What’s the matter with kids these days?”  The funny thing about that lyric from the Bye Bye Birdie musical number Kids is that it never goes out of style. It’s the same with finances. As we rush to stereotype people and create names and characteristics for every generation, we also like to say that the “kids” are irresponsible and don’t know how to handle their money. Well, sit down and shut it you over-spending Baby Boomers, because as Gen Y is showing some savvy.

Did you know that 1/3rd of all U.S. millionaires are 35 years of age or younger?

Maybe it’s because they’ve seen their Boomer parents spend too much and save too little or maybe it’s because they’ve been on the Internet since before they were in kindergarten, but Gen Y seems to have no fear of saving money and building wealth.

In a study by the research group TWENTYSOMETHING, INC. most 18-34 year olds feel that financial planning is important. In fact, 39.1% felt it was extremely important and only 8.4% really didn’t care much about financial planning.

One of the outstanding findings of the study was how this group uses the tools they have available. Overall, they are found to be high users of online and mobile banking and they use the Internet to learn about investing. All this interaction with their money has helped them keep better track and gain greater understanding.

They realize that Social Security alone will not finance their retirement. They know they’ll need additional sources of income above and beyond Social Security to comfortably retire. This is a dramatic departure from the attitude of past generations. The government reports that Social Security may become insolvent in 2038, and since today’s 18-34 year olds can calculate that they would be 55-71 years old at that time, they’re thinking ahead.

So just what advice do the Gen Y’s give?

  • “Retirement plans, Social Security, and anything else that says you are saving for your future is usually a lot of ‘bull.’ You have to watch out for yourself and take responsibility to make sure you are taken care of when you get to retirement age. Otherwise you will work your whole life paycheck to paycheck.”
  • “I know that there will not be any Social Security when I reach the age to receive it so I have to prepare my finances now, at age 29, to live comfortably at 65.”
  • “It has become apparent to me that investing is crucial to my future.”
  • 40% of Gen Y and 43% of Gen X said they “enjoy investing, checking [their] investments, and even making [their] own trades” (compared with 40% of boomers and 37% of silents).
  • 47% of Gen Y and 44% of Gen X said “investing wisely” will be extremely important to achieving financial security in their retirement (compared with 32% of boomers and 25% of silents).

Of course not all 18-34 year olds can be stereotyped as financially fit Gen Ys. Every generation has those who are go-getters and others who take it easy. But we just wanted to let your know that many of the kids are alright.

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