Despite possessing better financial habits than the total population, Millennials look at their financial future with pessimism.
While research presents compelling evidence to suggest millennials are developing sound financial habits, it shows concerning data about their mental state, said Mortgage Choice chief financial officer Susan Mitchell on the brokerage’s Financial Fitness whitepaper with Core Data.
According to the research, 23% of millennials said they monitor their finances at least once a month, and 56% of them monitor it at least once a week — above the national average of 52%. More so, the research showed that 21% of millennials said they save over 20% of their net income after paying mortgage rent and other living expenses compared to 16% of Australians.
The majority of millennials may have the right intention when it comes to managing their finances, pointing to saving and budgeting then paying for living expenses and purchasing a property as their life’s greatest priority right now, but they’re apprehensive about their financial future, Mitchell said.
“It is normal to feel uncertain about the future when you have your life ahead of you; however, young people have the luxury of time on their side,” Mitchell said.
The research revealed that 45% of millennials are not confident about being on the right track to financial success, and nearly 80% worry about their current financial situation — 57% of which are females and 51% males.
According to 40% of millennials, the rising cost of living is their single greatest concern for the next 12 months, a higher concern than job security, health and wellbeing.
Choosing the DIY approach
There are several factors that may be influencing the weak financial outlook of millennials. When Mitchell and her team asked millennials about their personal debt, 17% said they struggle to cover it, and 48% feel embarrassed by it.
According to Mitchell, those concerns could be affecting millennials’ ability or willingness to purchase a property. The research showed that 8% of millennials had bought an investment property, compared to 12% of overall respondents.
Recent data from the Australian Bureau of Statistics (5601.0) revealed that first home buyers in the market are fewer compared to this time last year. Mitchell, however, found the report unsurprising because of high barriers, such as stricter lending criteria, home loan deposits and high property prices, which “may be affecting millennials disproportionately”.
“Millennials prefer a DIY approach when it comes to administering their finances. Survey data revealed that 39% of Millennials would rather manage their own finances and seek reliable information to help support their decision making, versus 36% of the overall population,” Mitchell said.
The research found that millennials lack understanding when it comes to the value of professional financial advice because many of them didn’t know where to start looking for one.
“When we asked millennials what would drive them to seek financial advice, they said they would need to be in financial stress; suddenly come into a substantial amount of money; or generally possess more wealth. This is a common misconception,” Mitchell said.
“The reality is an experienced financial adviser can help you plan for your future, regardless of your level of wealth, and give you peace of mind that you are on track to meet your goals.”