Millennials Have Been Cheated Financially
‘Every generation needs a new revolution ‘
Thomas Jefferson (1743–1826)
The rules have changed. The financial plan used to be easy. Personal finance used to be very different!
Baby Boomers generation finished university debt-free, waltzed into a job for life, bought an affordable house and finished their last day of work with a handshake, an engraved Rolex watch and a guaranteed pension for life.
Generation X’s plan was also simple. To buy property, maybe two, maybe more. All at affordable prices. The astronomical rise in house prices has pulled up the property ladder making it unreachable for the next generation.
The world is moving faster, is more connected and people have more complex lives than we have ever done before.
Millennials need a new plan. We’re in a different world after the tornado of the financial crisis. Putting money into a bank means inflation eating your savings, you feel scared to invest after watching the financial crisis or there is no time at the end of the week to understand the seemingly complex world of the stock market.
The retirement cliff edge is fast approaching you don’t have enough money for the end of the month let alone enough money to last for the end of your working life!
Millennials were told we could have anything we wanted. Yet what we want has disappeared from our hands.
House prices are now so out of reach for the average London worker.
The weight of student debt feels like a chain around our ankles.
The cost of living crisis has intensified as our shopping basket gets lighter and lighter as we can afford less and less from our weekly budget.
Millennials (also known as the snowflake generation) grew up at the turn of the century and were born between 1980 to the end of the 1990s.
Millennials do things very differently from their parents. In 1968 if you bumped into a 30-year-old, there was a 56% chance that person would be married, had children, had a full-time job and a mortgage. Today if you bumped into a 30-year-old, there’s less than a 23% that person would have all the same trademarks.
Millennials need a new plan
Baby Boomers (who were born just after world war two between 1946 and 1964) are now turning 70 and made up the vast majority of the population.
Demographers have referred to this generation as the pig in the python. Everything this generation touched became massively disrupted from baby food in the 1950s to consumer electrics and personal computers in the 1990s. Health care and medical expenses is set to rocket in the coming years as 70-year-olds require a greater amount of care.
Why Millennials have been Cheated
Being in the majority has often meant that Boomers have got their way in terms of government policy due to a higher number of voters. There have been three ways that millennials have been hard done by in terms of government policy.
1) printing more money (called quantitative easing),
2) low-interest rates,
3) the help to buy scheme
4) Massive student and consumer debt
Quantitative Easing
Excessive lending to people who could afford a house previously (subprime loans) caused the financial crash. Rather than restricting lending to people who had been irresponsible, the government’s decision to print more money (quantitative easing). How can more money be bad? More money in the system means that for every pound that is printed the existing money value is reduced. So the £20 in your pocket is being eroded and the spending power of the pound coin in your back pocket has also been reduced. It also means that assets like the house you wanted to buy has now skyrocketed out of control.
Reduced Interest Rates
2) The Bank of England (who are employed by the government) decided to reduce interest rates as an emergency measure and has now kept them low for 11 years. This means that the money that you are saving doesn’t receive much interest for lending to that bank. It was previously normal to get 5% in interest rates so you would get £5 for every hundred pound you kept in the bank a year.
The ‘help to Buy' scheme’
3)Thirdly a scheme in the UK that is disguised to help first-time buyer that actually hurts millennials is the ‘help to buy scheme (which should be called the help to sell scheme). The government gives loans up to 40% of the property price to people in London. This increased a person’s affordability who would not have the money to buy previously (there are echoes of the 2008 subprime financial crisis here).
Are Millennials Snowflakes? What is the snowflake generation?
What is the Millennial generation and are they snowflakes? Find out by watching this video
Increasing the demand for houses and fuels the already crazy London house prices. This has been great news for the Boomer generation all who own their properties and love to check their houses price rises on Rightmove
The debt burden
4) University was not only free in the UK in our parent’s generation many people received University grants. University grants were a payment that a student would receive as an income to support their studies.
Not having thousands of pounds of debt piled onto you must have reduced the massive burden of crippling interest payments and paying back the years of studying for doing the ‘right thing’ and getting an education to improve your life chances.
The good news
With Millennials now beginning to dominate the workforce, their habits, traits and choices are now heavily influencing the market.
Today we Millennials have never had so many options and choices available for us. We can walk into any supermarket and decide from a vast selection of ingredients to make one of hundreds of different recipes from around the world to make up my dinner.
Technology today is incredible, and it gives us access that our parents could only dream of. We can hail a taxi in minutes from our phones, we can order almost anything and have it delivered to anywhere in the world the next day and can fly around the world staying in someone’s home for a fraction of the price and effort it would have cost a generation ago.
We now have to manage our own money for our future self who we look at in the mirror every day. We’re much more likely to live to 100 years old than ever before and need to have an income to pay for these later years.
Technology Changes
Today investment technology has moved far that we can do things today that people would only dream of a few years ago. We can invest in hundreds of different companies large and small in each corner of the world, which reduces the risk we need to take and improves the rewards we receive.
A similar thing happened to the car industry in 1900. Think back to 1900 when at the time the automobile car industry only provided luxury cars to the very rich. It was a young Henry Ford's response to building a car that was totally mass-produced. It could be driven and repaired by the owner. Where previously it was only for the rich requiring a chauffeur.
Today we have the technology to invest and manage our money easier and more conveniently than ever before. These investment vehicles are similar to turning a key in the motor car, investing for our future can now be done at the touch of a button. These investment vehicles not only enable us to get where we want to go but like the motor cars of the past give us freedom, mobility, power and romance of designing our ideal life in the future.
The opportunities to be financially independent and not have the drudgery the morning commute to work the 9–5 that you hate for the next 20 years until you can retire at 67.
Today you can put money into an investment vehicle and knowing by the number you need to get to live on for the rest of your life will give you the freedom that the young had stepped into the motor car for the first time turning the key, deciding their destination and then feeling the wind in their hair as they started moving.
‘Obstacles are those frightful things you see when you take your eyes off your goals.’
Henry Ford (1863-1947)
Imagine Henry Ford trying to explain how these new horseless carriages work to someone who had never heard of a motor car before let alone been behind the wheel or putting their foot onto the accelerator.
We are in the same situation with investing. We have these amazing investment vehicles that you can design your ideal life through your life plan and choose how fast you want to go depending on how much you put in and your risk profile.
Today we need education on how we use these vehicles. Simple steps and processes can massively reduce the amount of risk you are taking similar to putting on a seat belt or driving slower in icy condition.
We are not taught how to use these new vehicles at school or in the workplace.
The solution!
In my ecourse I am aiming to solve this problem as I guide you through my 5 step money mindset method with the aim of reducing the amount of risk you take and improve your returns, without paying for a financial adviser who similar to the chauffeurs of the past are not required by everyone.
Step 1 of this ecourse is to automate your finances to give you more space and time in your day to focus on the important things to you, like your business, your family, your life so you don’t have to worry, think, or even talk about money. You can instead concentrate on more important, productive aspects of your life.
Where you have more time, freedom and control so you can enjoy life to its true potential.
We have a choice to cling to the old rules that are grounded more to old habits than sense or correct business practices that have been tested 1000s of time. That we drag our personal finances into 2019 and craft a new approach to help our ourselves, our companies and the world a little better. It won’t be easy, it won’t happen overnight so let’s get started. The only way things will change is when you change. Work harder on yourself than on your job. Living paycheck to paycheck is not the answer. Doing the same thing and expecting a different result is the definition of insanity. You need to own yourself first. Become your own boss of your life.
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Neil Doig’s book Millennial Money Mindset: If you want the Fruits you Need the Roots is now available on Kindle, print or audiobook on Amazon.
Millennial Money Mindset was shortlisted by The Financial Times Bracken Bower writing award and was a best-selling book on Amazon.
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