The financial generation gap can at times seem huge.
Us baby boomers think we are the font of all knowledge, particularly when it comes to money issues, while the younger generation just roll their eyes and nod politely at our pearls of wisdom… well, that’s the way it happens in our family.
Yes, experience does count when it comes to managing finances but times are changing rapidly and there are some things we old codgers can learn from our 20-something friends and family.
1. Spend money on experiences rather than on stuff
Unlike us baby boomers, millennials aren’t focussed on “keeping up with the Jones’s” by showing their wealth for prestige. Instead of loading up on material goods, such as a big house or fancy car, millennials are more likely to spend their cash on intangibles like experiences or events.
They generally aren’t as ostentatious as the Kardashians. Most young Australians believe excessive materialism is pretty lame and view the recent robbing of Kim Kardashian as Karma.
Oldies fret about appearances while youngsters travel, have destination weddings, volunteer for an international charity or invest in their own wellbeing at the gym or yoga.
Millennials live very much for today and are happy to live like paupers quite often to achieve their travel or experience goals. Those experiences develop them personally and professionally. They don’t feel shackled to having to work for material comforts.
Their outlook on life can make sense financially. That new car or boat drops 30 per cent in value as soon as it leaves the showroom. And new furniture or appliances generally have no or very little value after you’ve bought them.
We can also provide a very convincing financial argument which says it is better to lease a house, and invest the difference between the rent and a mortgage, than to finance a house to live in.
2. Don’t own… share
Instead of buying stuff, millennials share what they need.
A massive new “collaborative consumption” industry has emerged to cater for this change to a sharing lifestyle. Everything from accommodation (Airbnb) and transport (Uber and GoGet) to garden tools (?) and everything in between.
Thanks to this trend people can, at a cost, rent everything from clothes to bikes through websites and apps. Plus, networking sites like Gumtree make it easy for people to connect with others locally and share goods like garden equipment or power tools.
Take a look in your garage or attic at everything you’ve bought, and rarely used, over the years, and I bet you’re thinking it would have made better sense to rent when needed and give it back.
3. Do your own research… it’s all there
Millennials make better decisions because they’re better informed. They are far more likely to hop on the internet and do research which makes them more engaged in their financial planning and decision making.
That’s not to say us Baby Boomers don’t care or aren’t engaged, but the younger generation access better more timely information on which they can make a better decision. Mind you, there is a point where they have an overload of information which can swamp them and prolong making a decision.
Rather than rely on traditional old fashioned sources of information, Baby Boomers need to switch to online news websites, apps and comparative shopping sites to super charge their information and make better decisions.
4. You don’t have to have deep pockets to get financial advice
Senior Australians often view their skills with online banking or tap and go payments as a badge of tech savviness honour. But they may not realise technology is also changing how financial advice is delivered and investments are accessed.
Now things like robo-advisors make it simple for people with portfolios of all sizes to get professional wealth management and, in some cases, even personalised advice. While it’s definitely not the same as sitting down with a financial advisor for a one-on-one consultation, millennials don’t seem to mind, especially since robo-advisers eliminate many of the high fees associated with professional portfolio management.
They really want to be involved and are willing to use technology so they don’t have those fees. Tech-savvy boomers can take a page from the younger generation and find expert help online as well.
5. Fail fast and cheap… but make a decision
There is no shortage of apps and websites devoted to managing your money and wealth creation. However, unlike millennials, Boomers may be hesitant to use these resources. The main challenge the older generation has is that they’re still looking for an instruction manual.
While boomers may wait for someone to explain how technology is used, millennials are willing to jump in and learn from experience. That’s something more boomers need to do. Don’t cling to 20th century thinking and tools. Flexibility and adaptation are needed.