This 2016, most millennials born from 1980–1996 will be in the age range of 20s to mid-30s. In the Philippines, the current median age for millennials is 24.
American sociologist Kathleen Shaputis has termed millennials as the Peter Pan generation, owing to the perceived tendency of delaying “adult” rites of passage – such as purchasing their own homes, or marriage, to name a few. This may be owing to the global financial crisis that broke out in 2007, which left much of the emerging adult population with limited job prospects and challenges in their finances.
Losing opportunities for investment gain
It is said that the country is in a demographic sweet spot, so more income is generated because of a growing workforce. This market upswing should result in higher earnings for young investors, and millennials who start investing at a younger age also have more time to diversify their portfolios and take more risk. They are optimistic about being able to put their earnings toward their long-term goals, but it is the lack of knowledge in managing their finances that leave them living from paycheck to paycheck.
Acorns, an investing mobile application, reported in 2015 that 85 percent of their global respondents either lack the knowledge to start investing, or are afraid of experiencing the same losses that their parents did during the financial crisis. Less than 1 percent of our population is investing in stocks, accounting for the 640,645 investor accounts at the Philippine Stock Exchange (PSE) as of 2014, according to Atty. Roel Refran, PSE’s chief operating officer (COO).
Acquiring experiences and not wealth
While many Filipino millennials don’t have student loans to speak of, many of them have other debts that come from giving in to the guilty pleasures of spending. They encounter issues when it comes to saving and budgeting their money while trying to acquire experiences.
A large segment of millennials allots huge amounts of money toward making memories. According to the Nielsen Global Survey of E-Commerce in 2015, 55 percent of young adults would rather spend their money on experiences than material goods. Going to another country or to a concert are some examples of experiences they like to spend on. While this is advantageous for personal growth, it may not be the case for financial growth since out-of-town trips within the country can cost from Php3,000.00 – Php20,000.00.
Choosing passion over job tenure
Forty percent of Filipino respondents in their early to late 20s said they expect to leave their current place of employ within two years, according to a survey by Deloitte last year. Many young adults are prone to jumping before a backup plan is in place, which drains what little finances they have. The inability to plan will have financial consequences for the millennial who decides to leave his or her job.
Unlike in previous generations where job tenure was paramount for income stability, the millennials try to find ways of having a backup plan while looking for a job that suits their passion and ideals for work-life balance. Monetizing their hobbies as a side business is one way this generation approaches this, which most of the time transitions them into doing the ventures on a full-time basis.
Some examples of these ventures are fiction writing; food-related businesses that market their products and services using e-commerce websites as their shop instead of the brick-and-mortar restaurant; and engaging in traditional arts, in which their work may be distributed by the artists through bazaars and the social media. This tenacity to pursue alternative job fields is another defining trait of the generation.
A survey conducted by the Policy Center at FEU reported that 67 percent of their respondents also have alternative means to support themselves financially. Another Deloitte global study posited that 70 percent of people within the millennial age range would rather work independently, and of that number, 90 percent have successfully put up their own projects and are thriving.
Paving the way for better financial decisions
This drive to learn and blaze their own path is the reason behind the increasing awareness among young adults that planning out one’s finances is necessary if one intends to sustain his interest in going into the untraditional career mold, or simply supporting themselves in the latter part of their lives. The essential steps to making this happen are to gain more knowledge about personal finance and apply them in their everyday lives.
Miggy Castañeda writes about personal finance for MoneyMax.ph. He has also contributed pieces to Yahoo! Philippines, ABS-CBN News, and Rappler.com. MoneyMax.ph is a financial comparison website aiming to help Filipinos save money through diligent comparisons of financial products.