Financial Tips for Millennials

 Chachanomics Money Talks: Financial Tips for Millennials

Though the habit of saving and investing is key in mastering your money, there is a worrying concern about Millennials (who comprise the youthful population) with no savings or investments to talk about. This is a pointer to a devastating underlying personal financial problem which calls for urgent redress.

3 Critical Questions

1. What does the term Millennials imply?

2. What are some of the common traits of this demographic group?

3. What kind of financial tips best suits this group?

1. What does the term Millennials mean?

Various definitions have been advanced about this demographic cohort or youthful group. Some sources indicate that Millennials comprise people who were born in early 1980s and early 2000s (meaning people currently in their 20s and 30s). This categorisation omits those born later on.

Generally, Millennials can be conceptualized the youth ranging from 18 to 35 years. This classification makes it easier to identify the defining characteristics of a group dubbed as Generation Y, digital natives or netizens - the "me generation" that lives in the "here and now."

They include a wide range of young people* who have finished secondary education or are school dropouts, students in colleges and universities, graduates, young employees, the self-employed and the unemployed.

These young people were either born or came of age during the time of a digital revolution ,that transformed the world into a global village - with the emergency of mobile phones, internet and social media platforms such as Facebook, Twitter, WhatsApp, Instagram, Imo, etc.

They constitute half of the world's working population, about 70% of Africa's population and Kenya's largest voting block. The 2019 Kenya National Bureau of Statistics (KNBS) census data states that 4 in 10 of the youth (38%) below 35 years are unemployed with the average pay in the formal sector ranging from Kshs.20,000 and Kshs.29,999.

The data also reveals that out of 47,564,296 Kenyans, 35,700,787 are below 35 years. This implies that the youth comprise 75% of the total population. Within the 18-24 years demographic, we have 6,352,326 making up the largest cohort and 13,777,600 between 18 - 34 years.

2. What are some of the common traits of this demographic group?

Millenials have certain distinct traits include:

i. Being suave and tech-savvy - fully dependent on phones and online platforms for interaction and business/financial transactions.

ii. Perceived to be spoilt brats because of their upbringing has been a roller- coaster ride. They are used to being pampered and provided with almost everything by parents even after being employed.

iii. Depicted as narcissistic, materialistic, technology addicted and entitled on account of their flashy lifestyles. They usually buy things that depreciate in value (flossets) like sleek cars, I-pads, live in posh estates, drink themselves silly, dress expensively etc.

iv. They are considered impulsive, impatient and have a big appetite for quick money. They are accused of living a hedonistic lifestyle which don't match their earnings. They live from pay check to pay check and are enslaved by debts.

v. They bet a lot and take all kinds of loans ranging from the easy-to-get digital loans like M-shwari, Fuliza, Tala, Branch and even Shylocks, Chamas, Saccos and mainstream banks without minding about the high interest rates and repayment period. Huge part of their income goes to repaying debts and little to save and invest.

vi. They have an inborn mistrust for financial institutions, financial advisors and coaches.

vii. They tend to be risk averse by not investing in financial markets such as stocks, government securities, unit trusts and any other passive income-generating ventures.

viii. They are less likely to follow traditional family pattern of marrying early and having many children. They delay in getting married, prefer cohabitation to lifelong marital commitment. Some marry and separate within a short time while others vow to remain single for long.

ix. They include celebs and socialites who don't easily follow traditional career paths but are in love with the creative and entertainment industry as singers, dancers, content creators, thespians, comedians etc.

x. Less likely to be religious but claim to be spiritual and God-fearing.

Despite the negative defining traits, it should be noted that Millennials have suffered significant disruptions ranging from high levels of unemployment during their tender years and the global recession caused the Covid-19 pandemic.

On a positive note, Millennials tend to be:

i. Socially responsible, committed to their lives and lifelong passions.

ii. They are proactive and confident at work.

iii. They work well with others who understand them.

iv. They look for guidance and leadership from older colleagues.

v. They have more money-making opportunities and huge potential to explore their talents. They make lots of money, blow it off in a huff and can make it again within a short time.

vi. No longer influenced by older people or fellow workers in offices but by fellow netizens who are striking it big in online channels.

vii. They are critical and not just passive listeners. They don't just listen and believe what they are told by parents, teachers, elders and coaches. They like asking questions and going against the grain if the situation demands so.

viii. Saving and budgeting may not work with them but require mentorship and coaching.

ix. They are not to blame for the financial challenges they face. Their personal relationship with money built over time matters a lot. The lack of personal financial literacy in Kenya is to blame for the obvious ignorance and poor financial planning among the Millennials.

x. Highly creative and innovative. As content creators, the innovate and devise novel ways of earning a living and solving problems affecting the society. They are digital wizards and innovators who have disrupted the status quo. People like Mark Zuckerberg invented Facebook, bought WhatsApp and Instagram which are leading social networking sites.

xi. Able to dictate the direction world takes and influence the future. The Kenyan youth, for instance, should play a significant role in the shape and direction the country takes politically and socio-economically. In the recently concluded Zambian general elections, the opposition president aspirant, Hakainde Hichilema, managed to garner overwhelming support from the Zambian youth under 35 who constituted more than half of the country's registered voters. If the Millennials' potential is tapped, nurtured and exploited the world will be on the first lane technologically, socio-economically and politically. Some global revolutions were sparked off by the youth like the Arab Spring caused the toppling of Tunisian, Egyptian, Syrian and Libyan corrupt regimes.

There is an urgent need to teach Millennials personal financial education, leadership and other soft skills in schools in line with the Competency Based Curriculum (CBC). Other social agents such as the mass media, the family, church/mosque etc should play a pivotal role.

3. What kind of financial tips best suits this group?

i. Acquire financial education. Meaningful personal financial education is key to prudent financial management. We have already said that lack of financial literacy is the cause of Millennials' spendthrift and flashy lifestyle. Millennials should seek productive advice from parents, take advantage of online resources and get a dependable coach/mentor.

ii. Make saving an habit. Millennials should spend and save wisely. Savings should be budgeted for as a first expense rather than a last one. Cut down on credit card debt. Set a saving goal and prioritize saving for a rainy day, investment and emergency using 50/30/20 rule (50% for mandatory/most essential expenses, 30% for savings and 20% entertainment). Living within one's means should be the guiding principle as one endeavours to earn more income.

iii. Plan for the future. Start investing early enough using savings. Save and invest consistently to build a sustainable portfolio. The rule of the thumb is: go slow but steady, diversify your investments, take advantage of youthfulness and understand the financial markets well.

iv. Choose and use debt wisely. Learn the differences between good and bad debts. Good debts can repay themselves and have lower interest rates (6-8%) like student loans, Uwezo fund and women enterprise fund to start among others. Bad debts cannot repay themselves and have higher interest rates and need to be paid off quickly to avoid accumulating high interest like credit card, Chama and bank loans.

v. Leverage on the use of technology. Being techno-savvy should make you develop or use an app to track your savings , spending habits and pay your bills in one place. You can set reminders in order to stay fully aware of your finances.

In sum, millennials form a useful demographic group that can spur the development of a society. They should shun excuses that make them poor savers and investors. Misleading reasons such as not earning enough money, being trapped in debt, lack of saving goals, financial illiteracy and consumerist lifestyle can be addressed by adopting sound financial strategies. Record your expenses daily, budget your money, set financial goals, cut down costs, and automate your savings and invest wisely. The Kenyan Millennials have infinite dreams and aspirations. Many want access to good education and a significant number want to run successful enterprises. They need moral and financial support in order to innovate, create and build startups from scratch. This calls for proactive leadership to address and fill this glaring lacuna among the young people.

Chacha Nyaigoti Bichang'a,

Financial Coach, Leader & Author