How Today’s Young Adults Can Meet Tomorrow’s Financial Challenges
Many people love to reminisce about those carefree days of their youth. Remembering that time before family and careers came along, and when young people transition from education to their first serious job. Those days were often marked by parties, fun, and free-spending financial habits with little thought for serious adult concerns like investing their money wisely or seeking financial planning advice. Today’s youth, however, don’t have it quite as easy as those who walked the same path all those years ago and need good financial advice more than any previous generation.
Vision Property & Finance Financial Adviser, Leigh Johnston, says while Millennials – those born around the turn of the century and only reaching adulthood in the last several years - have youth and time on their side, they face a number of financial challenges not experienced by previous generations.
Changing Face of the Economy and Work
Leigh says in only two decades the economy and workplace have changed considerably.
“In the time Millennials have spent growing up there has been massive social and economic changes brought about by technology and the lingering effects of the Global Financial Crisis. Even how people now find work and carry on their careers has totally changed, with a shift to more contract-style work arrangements in a more flexible job market.”
According to the Australian Bureau of Statistics (ABS) in 2017, of 12 million workers more than 1 million are considered independent contractors. Millennials account for more than one-fifth of this number.
“With self-employment on the rise, driven by the technology boom, mandated savings for retirement through the Super Guarantee do not apply, and this, coupled with rising house prices and stagnant wages growth, provide stark challenges for Millennials. This is particularly the case when it comes to planning for a comfortable retirement.”
Leigh notes that in nearly 20 years’ experience in the Financial Planning industry, rarely has she met a self-employed client, irrespective of age or circumstance, who contributes to Superannuation. This is backed by further data from the ATO in 2014/15 which suggests that around 75% of self-employed people do not contribute to their Superannuation.
“The resulting concern is that come age 65, self-employed individuals – many of whom are Millennials - will have minimal retirement savings. This could see them forced to continue working a lot longer than they would like.”
Do Something Now to Avoid Trouble Later
For young people, retirement seems so many years away, and there is still a lot of “living” to be done in the meantime. Their immediate financial goals will tend to be centred on building savings for a home deposit, coping with the rising costs of living while dealing with low wage growth, and paying-off higher education debt amongst other financial pressures.
But Leigh says there are definite steps Millennials can take to help improve their retirement savings and late-in-life financial health.
“Millennials can learn to manage their finance better by implementing cash flow management strategies, like good budgeting and bill tracking. They can also identify areas that can be improved to increase cash flow surplus with potential tax benefits – investing their hard-earned savings so their money is working better for them.”
You Are Never Too Young to Benefit from Financial Advice
Planning for their financial future might seem like something only older people do but Leigh urges Millennials that no one is too young to start planning their financial life.
“The sooner you start to plan your financial life the better your outcomes are throughout all stages of your life – not only your retirement. We can help you plan for kids, with children, and for life after children are adults and living out of home. The truth is, with good planning, you can be financially healthier no matter what stage of life you’re living.”
Would you like to learn how you can better plan your financial life? Give Vision Property & Finance a call on 1800 004 663 and speak to Leigh about how we can help you better plan your financial life.
*Leigh Johnston is a representative of FNP Solutions Pty Ltd (ABN 87 156 409 531) Trading as Vision Property & Finance Newcastle a Corporate Authorised Representative of PATRON Financial Services Pty Ltd ABN 12 122 381 908 AFSL 307379.