How millennials are managing their money differently

It is a given that life looks different for millennials in comparison to the previous generations. Mobile technology and the internet boom has changed the way in which they go about their professional and personal lives. With the government’s advocacy of a cashless economy, money management has also got a makeover, rendering a different hue to earnings and investments. Yes, Gen Y is managing their finances differently. And like any other generation, they have been making some smart decisions..and some that aren’t. Let us take a look at what they are doing right and what they are not. 3 ways in which millennials are totally crushing it

1. App-driven money management - The rulebook of finance management has been rewritten by technology; and millennials have embraced technology and taken app-driven money management to uncharted places. Generation Y is making the right use of financial mobile apps, payment wallets, and internet banking to propel the country to the status of a cashless economy.

Today, we have apps that even make purchasing and selling stocks ludicrously easy. Insurance companies have also joined the internet sales bandwagon and are offering jaw-dropping discounts on several insurance products when purchased online. For instance, you can get a significant reduction in motor insurance premium if you buy directly from the insurer’s website. The added advantage of easy claims and policy renewal cannot be overlooked either. Thinking of sending money to friends or family during the festive season? Payment wallets make the entire process a cakewalk. The “Smartphone Generation” likes to save money effortlessly, and thoughtfully designed apps make use of the flourishing mobile technology to achieve just that.

2. Judicious shopping - Millennials are seen to be a very cost-conscious generation, but this does not imply that they are miserly. Gen Y understands that discounts under 20% does not promise big savings. They also do thorough research before making a big purchase. This ensures that they are more likely to buy a product from a different store if they are liable to save big that way. Yes, store loyalty does not mean much to millennials; they just focus on bagging the best deals. In a way, this can help in the fruition of their plans to limit their spending every month.

3. The potential of a side hustle - There are many graduates who are saddled with student loans when they step out of college. The fact that they lack any practical work experience only adds to the difficulty of landing a job - a maddening catch-22 situation. However, many millennials are opting to choose a freelancing employment option till they land a permanent job. This not only keeps their talents sharp, they also get to pick up some extra money that really goes a long way in paying off their debts.

Youngsters these days do not flinch when it comes to putting in efforts to earn some extra cash through a side hustle even when they have a full-time job. This ability to wholeheartedly accept work they are suitable for in an attempt to better their financial situation is something that was lacking in the previous generation. What the millennials can improve on

1. Retirement planning - It is crucial to have a solid financial plan in place so that you can achieve real strides in your financial position. This will help in keeping you ready to retire when the time arrives. For most, planning for retirement is something that can always be looked into at a “later” stage; the ripe time for investments is indistinct as is the need to procure life insurance. In fact, you should be aware that most insurance companies offer you life insurance policies that are cheaper and yield better returns when you start out early. Similarly, saving a part of your income for retirement is an activity that should start when you land your first job. This way, the power of compounding ensures that you have a handsome amount in your retirement corpus for the sunset years.

2. Dealing with loans - After you graduate, it is imperative that you pay off your student loan at the earliest. You should be disciplined enough to make the necessary sacrifices for the same. Taking on a freelancing job for some extra money can also help you in keeping your debts to a minimum.

While it is quite possible to live a debt-free life, that is certainly not a very smart move. You should understand that loans can be classified into good and bad debts. A good debt is an investment that will grow in value over a period of time or provide you a long-term income. Investing in property through a home loan or financing your further education through a personal loan are examples of good debts. A bad debt is incurred for the purchase of objects that quickly lose their value. Such debts also carry high interest rates. An example of a bad loan is a credit card debt. Millennials should focus on limiting the use of their credit cards at every possible opportunity, as they are just fuelling a bad debt in the process.

3. Taking care of your health - The increase in disposable income and poor eating habits have rendered youngsters to a host of lifestyle diseases. It is important to focus on a healthy diet plan and exercise regularly for long-term health benefits. You should also buy a health insurance policy to cushion your family financially from the expenses arising from an unprecedented event. It makes sense to buy health insurance early in life, as most providers offer lower premiums for younger applicants.

On the brighter side, the access that millennials have to digital information makes them much more aware of their worth and the earnings of their contemporaries. They are also more aware of their privileges at the workplace. This mirrors in their investment philosophy, and they look for employment that enriches them personally and professionally.