Older generations have sage advice regarding healthy finances to pass on to younger generations. While technology and innovation have brought new opportunities, they’ve also created unique challenges that many Millennials need help overcoming. Here are 18 financial gems millennials can borrow from their predecessors to help them achieve a healthy financial future:
Live Within Your Means
Most people from older generations often grew up during times of scarcity, instilling in them the value of living within their means. While millennials might be tempted by instant gratification and easy credit, prioritizing needs over wants and avoiding excessive debt is crucial for building a secure financial future. This means, for example, that when you reach for your credit card for a purchase, you should plan how and when you will pay it off rather than accumulating interest.
The Power of Delayed Gratification
Older generations often practiced patience and delayed gratification to achieve their financial goals. Instead of succumbing to impulsive purchases, they saved for bigger things, like houses or education. Millennials can benefit from adopting a similar mindset, learning to prioritize long-term goals over fleeting desires. This will mean forgoing the expensive meals at fancy restaurants and designer clothing to save up for a new car, mortgage deposit, or a dream vacation.
Diversification Is Key
Putting all your eggs in one basket is not wise, as some older generations learned the hard way. Having been often disappointed, older generations learned to diversify their investments across different assets and sectors, minimizing risk and weathering market fluctuations. Millennials can apply this principle by diversifying their income streams, investments, and savings strategies, even if they have little spare money once bills are paid each month.
Compound Interest Is Your Friend
Many older generations grew up understanding the magic of compound interest by saving early and allowing their money to grow over time. Boomers’ advice to Millennials is to start thinking about their retirement years by investing a small amount of money into savings. By spending now and saving later in life, you are less likely to have a comfortable financial future, particularly when you retire.
Pay Yourself First
Boomers often prioritized saving some of their income before paying bills and expenses. This “pay yourself first” approach ensured they built a financial safety net and achieved their financial goals. Millennials can emulate this by automating savings and treating it like a non-negotiable expense.
The Value of a Budget
Budgeting might seem restrictive, but older generations understand its importance for tracking income and expenses, identifying areas for improvement, and achieving financial goals. If you are a Millennial who does not manage money very well, spending time to set up a spreadsheet to draw up a budget can ease your financial woes. Some apps and websites help you budget and monitor your monthly outgoings to avoid getting wrapped up in paperwork.
Build an Emergency Fund
Older generations understand the importance of having an emergency fund to cover unforeseen expenses without resorting to debt. To help deal with the inevitable curve balls that life throws at us, Millennials should follow in their parent’s footsteps by building an emergency fund equivalent that will cover at least 2-3 months of living expenses.
The Importance of Homeownership
For many older generations, owning a home was a crucial milestone in achieving financial security. While the path to homeownership might differ for millennials, understanding the potential benefits of responsible ownership and exploring alternative options can be valuable.
Education Is an Investment
Many generations prioritized education, viewing it as an investment in their future earning potential and financial stability. While many Millennials did, and still do, value education, there are always opportunities to continue your education, whether going back to college, upskilling, or taking on an evening course to improve your skills. Millennials can also encourage their children to make informed decisions about their education and can help finance it where possible.
Don’t Fear Negotiation
Millennials can learn about the art of negotiation from older generations to secure better salaries, benefits, and deals, empowering them to achieve their financial goals. Boomers grew up in a negotiation culture, advocating for themselves and their worth, skills that are only sometimes apparent in younger generations.
Beware of Get-Rich-Quick Schemes
Get-rich-quick schemes have existed for centuries, yet some Millennials continue to fall for them. Older generations, however, quickly learned the importance of responsible investing and avoiding risky ventures promising unrealistic returns. A dose of caution is needed for Millennials, who should seek sound financial advice and avoid investment strategies that seem too good to be true.
The Value of Gratitude
Living through leaner times, older generations often practiced gratitude for what they had, leading to responsible spending and mindful consumption. Millennials, however, are often accused of having everything handed to them on a plate, but if they take the advice of their elders, they can cultivate a more grateful attitude. This can be achieved by appreciating their current financial situation, avoiding comparison, and promoting financial well-being.
Building Strong Financial Relationships
In the past, people relied on the support and guidance of trusted financial advisors or mentors, with older generations often having closer relationships with their bank managers, for example. Rather than go it alone, Millennials can benefit from seeking qualified financial professionals and mentors who can offer personalized advice and support their financial journey.
Planning for Retirement
While retirement might seem distant for millennials, starting early and planning their retirement is crucial. Older generations serve as an example by emphasizing the importance of consistent contributions and understanding retirement planning options.
Financial Literacy Is Crucial
While older generations valued the importance of education, as we discovered earlier, they often had limited access to financial education. Recognizing this gap, millennials can empower themselves by actively seeking financial literacy resources, understanding financial concepts, and making informed decisions. Local banks and online financial support are popular ways for younger generations to fill the knowledge gaps in managing their money.
Embrace Technology, but Use It Wisely
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Technology offers new financial management tools, but older generations remind us to use them responsibly. It is wise for Millennials to refrain from using technology to their advantage, such as online banking and pension formulation websites. However, managing their finances the old-fashioned way offers, through face-to-face budgeting with their partners, for example, can be equally profitable.
Offer Support and Empowerment
Most Millennials will likely have been advised by their parents and grandparents regarding finances and life. Older generations have lived a life of sharing knowledge, tips, and advice so that they can help themselves and others. This should be something younger generations take on board rather than trying to work everything out themselves and keep others from learning from their successes.
Be Respectful of Individual Circumstances
It is fair to say that Boomers have a strong work ethic and have built their success through strength and determination. That said, many Boomers are humble in knowing that not everyone can have financial stability, so it is important to empathize with individual circumstances. Millennials would be wise to take this advice as they never know when their circumstances will change and need to lean on others.
