The spending habits of young people show that experiences mean more to them than buying stuff. So are they better at managing money than their Boomer or Gen X parents? Or is FOMO leading them into the dangers of growing debt?
For some years, retail businesses have been in a tailspin about the rise of the experience economy. Instead of going on shopping sprees, people are channelling more of their cash into dining out, weekends away and holidays. In 2015, JPMorgan collated data from credit card spending by millennials (those born between 1981 and 1997) and non-millennials (born before 1981). They found 34% of spending by millennials was on travel, entertainment and dining, compared with 28% for non-millennials.
With less emphasis on buying stuff, this could be seen as a welcome minimal movement among millennials. However, with the rise of social media, sharing photos from our latest experience, rather than parading with a new purchase, has become the preferred way of keeping up with the Joneses.
The dangers of FOMO
So the pressure to buy, is being replaced by the need to be there, or what’s become known as FOMO, ‘fear of missing out.’ And according to a recent survey by Credit Karma, it’s a fear that’s fuelling financial problems among young people, with nearly 40% of them going into debt to join in on the latest experience with their peers. And two-thirds of millennials surveyed said they regret spending more in social situations than they had originally budgeted for.
If you’re in danger of messing up with money thanks to this pressure to be involved, here are some tips to help you enjoy a fulfilling life without regret:
Automate your cash flow
Automating your cash flow is one of the key ways you can stick to a budget. Budgets are much harder to stick to when all your spending comes from the same pot of money. By directing income into four key accounts you can ensure you’re taking care of everyday expenses and savings with enough left over to pay for the extras without getting into debt.
Find ways to stick to it
If you’re finding that keeping up with your friends’ social agenda is making it hard to keep to your budget, maybe it’s time to start taking the lead with making plans. Coming up with your own ideas for how to enjoy your weekend without spending big or celebrating on a shoestring could help you and your friends get better at living within your means.
Call on the crowd
If reading up about money, budgeting and saving sounds like a boring waste of time, think again. The blogging world has blown up with money advice for, and by, young people that’s entertaining and relevant. Browse some of the best money blogs for 20-somethings and start learning how others are enjoying life to the full and still making the most of their cash.
Break through the taboo
There’s no need to limit yourself to getting advice from the blogosphere. If you’re struggling to make ends meet and join in with every social experience that comes your way, chances are your friends are too. Maybe it’s time to break with the tradition of money being a taboo topic and get real with your friends about finances.
Source: Money & Life. 23rd July 2018