Millennials: The generation on duty

Finance illiterates or unprotected consumers?

It is concerning how extensive research is somehow trying to prove that the millennial generation, which is taking over the professional and financial stage of society replacing the boomers, does not seem to be doing well for the economy. Those who were born between 1981 and 1996 in the US represent the biggest population in one generation of the country ever, and let’s allow ourselves to say that catastrophically, are not managing the financial duty of our times close to acceptable. But, this is questionable my friends.

120 million Americans aged 18-40 years old represent 38% of the labor force today and we are expected to be 75% of the US workers by 2030. It should be a wakeup call to know that out of this population at least 49% of us have insufficient funds to cover an emergency cost of $500 USD today. This is jaw-dropping. We have pushed the bar for household debt achieving a $12.7 trillion USD nationwide and we have added another couple of trillions on revolving credit. The highest peak of credit scores in history! On top of this, a recent college graduate will carry a $100,000 USD in student loans and could owe as much as $1,100 USD per month for the next 10 years of their life (This is half of the average income in the US and 250% above what boomers student loan cost used to be). This is another 1.5 trillion USD debt carried by 46 million students in the USA as of 2019.

And why is this credit moving so high and shredding our young pockets?

Incredibly, millennials are increasingly spending on experiences that no other generation had before, influenced by social media, such as traveling, eating in the trendiest restaurant, coffee (Hipsters and all tech-savvies are going crazy on arty-coffee lifestyle, blame it on Starbucks), ordering food, attending to live concerts and sport events, latest fashion clothing and electronic gadgets. And we call these priorities, along with our large education bill. 

As well, millennials have proved to invest more than any other generation in our wellness, resulting in a peak of early homeowners that brings along repairing, refurbishing and remodeling expenses at a very young age. And it is true that millennials like to design and personalize our space very often. So, yeah, it could be that the economy is not being regulated fast enough to adapt to a world that our massive number of new adults are trying to build as early as possible today. We are assuming big obligations to achieve happiness too quickly and ignoring the consequences of dealing with costly living preferences with paralyzed wages. 

Most of these living preferences are considered luxury by the boomers, but essential to millennials. LOL, it could be a matter of perspective between the system left behind by boomers and the new tech-led society behavior. Experts are strongly considering this as the open wound in the generation gap. Now, what could support this painful idea are the records on the cost of living being almost 200% higher for us than what it was for boomers. The income power of millennials has increased barely 6% in the last 30 years in the US. We are trying to achieve a certain lifestyle but at a very high cost.

How well-equipped with basic financial concepts are we? How adequate information we possess on our individual economic burdens? Do we understand and implement savings or even a retirement plan in the long run? These questions would often lead to general conclusions suggesting that there is a widespread level of financial illiteracy among our generation. This would mean that a lot of us do not have the ability to cover our basic needs and financial obligations, to save money and secure our financial future, and that we are also disabled for decision-making to effectively create and manage wealth to enjoy life, especially in vulnerable groups like young women, young African Americans and young Latinos. Nevertheless, these premises can tell us what we lack but not really explains why. If we flip the preposition, the other way around… It could be, instead, that the reasons for our financial shortages are that the economic structure inherited is not doing well for the millennials’ society needs.

Very few of us rely on the help of experts or financial advisors to make savings and investment decisions. I think more of us should start with that for guidance on how to bridge the gap. What do you think? What can be changed? Leave your comments; share your thoughts… 

Covid-19 is making Utilities vulnerable

Experts: “Keep your hands on the steering wheel, We may be on a hell of a ride at the verge of a recession.”

The hardship on paying bills is a subject that concerns at least half of the population in the USA. Recent years’ statistics have shown that difficulties were being experienced by a wide range of the population, especially for those in the range of 18 to 36 years old. If being a young adult wasn’t hard enough, it is time to learn and pay attention to your wallet ASAP.

Overall, 4 of every 10 Americans are struggling to pay basic needs such as food and housing bills since 2018. But we have been surprised by the fact that in only 3 weeks after the pandemic lockdown, over 30 million Americans filed unemployment benefits. The picture is just not getting prettier with COVID-19.

As far as 2020 goes, statistics have shown that there is an average of 5 million single parent-led households in the United States from which around 80% of them are led by single mothers. Also, indicators show that women, black Americans, Hispanic Americans and young adults are more likely to struggle to meet their basic expenditure needs. If you have identified yourself in these groups, you will understand the vulnerable position and the risks you are in today.

Covid-19 has applied a greater impact on our homes as the pandemic is taking its toll on the economy for which our thoughts must be focusing on how to get sustainable to slowly get back on track.

We should all get serious about this! This is a historical impact!

In non-pandemic times, household expenses fluctuate on a month-to-month basis by which low and middle income families in the USA have manifested they were already experiencing an extraordinary bill shock. Regularly happening, two or three times a year, an unexpected emergency holds them back from saving money and a period of more than 12 months to recover from such a financial bump. These extraordinary events were normally recorded for medical emergencies, car or home reparations. If it was hard before, it will be even harder to establish a home financial plan to follow up your spending rhythm due to the arising health issues, unemployment and uncertainty that the COVID-19 novel brings for the next weeks or months. We still don’t know.

Think about how high our bills will skyrocket while we increase the demand for electricity and water while the entire family works and studies from home. We need to be aware of this. It is important for the majority of us, from our respective corners during this massive social isolation, to start restructuring our home financial plan and take a look in retrospective to define what we can do better to stay afloat.

Bloomberg has developed a high frequency tracker and market-base indicators to show us the depth of the downturn, already considered the steepest fall since the 40’s.  You can also use UJ utilities tracking dashboard to keep your home expenses graphs handy. It will be a pretty cool tool available for you very soon and you can request for a financial advisor from UJ’s team to help you go through your graphs and explain your current expenditure situation.

As the economy shrinks, your budget should be held tight. Use the digital assistance available to help you prepare (this is the digital era for goodness sake, right?), stay resilient and jump this bump. We are all in this together.