Millennials Are Making More Money Than Previous Generations, But They’re Not Prepared for an Emergency
Spending money to feel good is the stupidest thing
Our problem is more psychological than economic.
Let’s talk a bit about our saving skills.
It seems that as we earn more money, we have yet to master the skill of setting aside appropriate amounts of money for a rainy day.
We want spring break every year.
We want to live like the Instagram famous, even if we are not rich or famous.
All of this has left many of us unprepared for the emergencies that life can put in our path.
But don’t just take my word for it. Look at the numbers. Numbers don’t lie.
A survey conducted by Affirm — a buy now, pay a later financing company, confirms this. The survey found that 40% of Americans owe more money on credit cards than on emergency savings.
This means that one-third of Americans are not financially prepared for an emergency.
So what does this say about us?
Economics is out of the conversation at the dinner table.
Our parents and grandparents were better off.
They had a lifestyle that relied less on money to live.
In previous generations, pension plans were not yet circulating by word of mouth, but people were still better with money than we are.
It was not uncommon for people in these generations before ours to pay cash for a car or get a large down payment for a house.
Behavioral changes are not necessarily fun, but they are important when it comes to establishing some financial security.
Suggest old-fashioned things like making a budget on paper and paying yourself first when you get paid weekly, biweekly, or monthly.
If your family wants to eat out, look for restaurants where children eat for free.
When it comes to children and money, a change in spending behavior should start from the cradle.
Maybe we should learn more about psychology than economics to build a financial empire
Our spending habits and lack of savings are heavily influenced by how society has changed and how our behavior has changed.
The constantly flaunted lifestyles of Instagram celebs and easy access to the internet 24/7 have contributed to this less-than-smart spending pattern.
But let’s not put the blame on society.
For previous generations, it was a really different time, where they weren’t as aware of the extravagances of the Instagram super-rich. It wasn’t like that for the previous generations.
When we get money now, especially the kids, they have an unlimited variety of ways to spend that money, whereas before our parents had to go to the store.
Spending money to feel good is the stupidest thing
Look at your bank statements every month and write down the money you’ve spent on items you could cut back on and start using those savings to pay it off.
For homeowners who have reached the point where they have no savings left, now is the time to refinance with a lower mortgage rate.
Take advantage of low interest rates over 40–60 years.
If you have no emergency savings, you simply dare that crisis to happen.
It is easier to save 50% of your income than 10% for this very simple reason
Anyone who saves 10% of his income really wants a Porche.
If you save 50% of your income, you are not saving, you have made a lifestyle choice.
Anyone who doesn’t spend 50% of his income doesn’t want a Porche, but rides a bike or publicly and borrows a car when he goes to the supermarket.
It is this lifestyle choice that matters.
What I really want and not: What I think I owe my neighbors.
You own things, but things also own you.
Classic physical interaction. The earth attracts the moon and the moon attracts the earth. When the moon’s attraction becomes intense, we call it a living tide.
It is the same with things.
Once they have settled in your home, you must take care of them.
If you rent a Car-to-go, you can park it anywhere, the main thing is not in an area without parking. You don’t just park an $80,000 Mercedes in every neighborhood.
And when in doubt, you better park it on the curb before one of the outside mirrors gets ripped off. In other words, you take care of it.
The problem: our strength is finite.
We only have a certain amount of attention available to us each day. We can use them in a targeted way or waste them all over the place as a fuss about 1000 things.
Every single thing we possess demands a portion of our attention. We even worry about things that have been passively stored in the closet for years.
And then the next collection of clothes arrives, and you forget about it.
The quality of a shopping spree is inversely proportional to its duration.
Not everyone is like that, I understand that. But before every purchase, the question must be asked:
Will this purchase bring me closer to my long-term goal of life satisfaction?
This article is for informational purposes only. It should not be considered Financial or Legal Advice. Not all information will be accurate. Consult a financial professional before making any major financial decisions.
This article is a bit misleading, in that Millenials are making more money than previous generations, however the money that they have is not the same value as it was. Look at thr prices of houses, college tuition, healthcare and new cars as an example, they have risen astronomically yet real wages have stagnated. It's less that Millennials are actually better off but rather the cost of EVERYTHING has risen around it. And with many Americans only one major illness away from bankruptcy, either from losing their job or the price of out-of pocket healthcare with little.to no government subsidized healthcare options available above breakeven wages , this makes Millenials more vulnerable to macro economic changes even if they do have any savings