How to Teach Your Gen Y About Money
Characterised by a heightened access to information, technology and travel, Gen Y refers to the generation born between 1990 and the early 2000s, currently in their mid-20s to 30s. Unlike generations before them, Gen Y is personified by a unique and somewhat laid back attitude towards work and money.
Gen Y has seen economic volatility early in adulthood that has, in some cases, impacted their employment opportunities and their motivation to learn. As a result, many of these adults and young adults are choosing to live at home longer and to wait longer before purchasing a property.
With this perceived lack of motivation and enthusiasm when it comes to finances, it is worth considering the following strategies if you wish to improve the financial management skills of a Gen Y family member.
Board & Borrowing
Making the Gen Y in your family accountable for their finances by implementing rules around borrowing, rent or contributing to household expenses is a great way to introduce finance to them. These boundaries provide an informed perspective on living independently as well as the demands and requirements of running and a household and maintaining a certain lifestyle.
Long Term Saving
Whether it’s purchasing an old car or a loan for an apartment, helping to introduce your Gen Y to a long-term savings goal is a good way to implement long-term savings habits. This is important as studies have shown that while Gen Y is able to consistently save on a monthly basis it does not equate to long-term savings habits.
Given their age and length until retirement, it’s hard for the Y Generation to get excited or interested in superannuation, leaving them ill-informed and unprepared in this financial area. People who fall within this age bracket often have multiple superannuation accounts due to multiple jobs through the early stages of their working life.
A conversation with your Gen Y relative about managing super and selecting an appropriate investment option that suits their life stage and risk preference, or about consolidating multiple superannuation accounts and minimising fees can help to prepare them to make informed superannuation decisions.
Have A Conversation About Debt
With more debt at an early age than any previous generation (though largely due to student loans), it is important to make sure your Gen Y family member is aware of the total principal and interest payments on their loans or credit cards. Where necessary it is important to help your Gen Y to create a practical repayment schedule and to consider making it part of a debt management plan.
Help Them To Implement A Basic Budget
Despite being more than capable of putting together a simple budget, few Gen Y’s actually do so. Whether it’s creating a simple budget at home on Excel or contacting a financial adviser to consider future financial saving options and goals, getting down numbers and tracking finances is a great way to engage your Gen Y with finances.
With the Gen Y age group accounting for a large portion of new company registrations in recent years, Gen Y has shown a stronger tendency towards entrepreneurship from a statistical standpoint. Whether it’s due to an attraction to new digital business models, collaborative start-ups or self-employment, if your Gen Y has a small business idea you can help to guide them in the right direction. Use your own experiences to help them to turn their idea into a reality with personal, financial and administrative insight. Self-employment is a great way for them to learn how to become more responsible with their money.
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