There is no denying the fact that Millennials have spent the last decade struggling to build wealth. The 2008 Global Financial Crisis has seen ripple effects impacting this generation heavily: the last decade marked with rising debt, job insecurity, housing affordability, wage gaps, rising cost of living and delayed decisions in home ownership and marriage. Fast forward to 2020 and the current global pandemic; another period of economic uncertainty and continued doubt that affects millennial wealth.
For older generations, such as Baby Boomers who own 53 per cent of the country’s wealth, this might not seem like an issue. But what about for those millennial entrepreneurs, business owners and employees? What are the risks to business? Performance? Managing teams?
More debt = more stress
Financial challenges mean loans are required: loans that add debt to debt. More debt equates to more stress and anxiety. More stress and anxiety translate into loss of productivity, lower performance, or absence from the workplace. Decreased performance equates to lower revenue. Lower revenue equates to risk of business closure.
It’s easy to see how the ripple effect of this generational issue bleeds into business. Easy to see why being aware of it is important.
The good news is, research is suggesting that amidst this economic crisis, there is a silver lining. In fact, the economic impact from COVID-19 has inspired a revived drive within the generation, and many millennials (including business owners) are shifting their focus towards wealth-building and financial literacy because they’re motivated to learn how to future-proof finances.
Limiting expenses, optimising savings, and expanding investment portfolios are behaviours being observed. Research indicating that up to two-thirds of millennials have changed their thinking when it comes to spending, with much of the population already spending less. Broader plans to reduce travel and trips to the office, moving closer to family or forsaking cities for less populated areas are all on the consideration list. Millennial business owners and entrepreneurs taking control over their finances: examining cashflow, rethinking spending, and reducing overheads.
Five strategies to improve your finances
As millennial business owners there are strategies you can adopt to help minimise strain and improve finances. Equally, if you are a leader or manager with millennial teams, these same tips can be offered as guidance.
- Check spending. Wealth is not only about saving money but about managing it. Lifestyle habits also have to do with wealth management, meaning instead of spending on what you do not need, save money for what you do need to build wealth. This also applies to your business cash flow. Understanding the cash flow of your business, is critical.
- Budget. There are plenty of online (free) budgeting tools or business software to help set you up for success. When it comes to spending, ask: is it a must, or is it a ‘nice to have’? Is it an area of the business that is critical?
- Apps. Use apps and get involved with different type of banking and investment accounts that help with saving and managing money for your everyday and business.
- Mindset. We all know that “for things to change, we have to change”. To deal with uncertain times and continue to create wealth, it’s important that you recognise that personal responsibility, discipline, financial education and desire to succeed are going to be important to overcoming challenges.
- Seek advice. Not all of us speak fluent finance – or want to. Seeking advice from an expert can help minimise anxiety, provide clarity and help set up future financial goals. There are plenty of wealth management and financial advisors who can offer advice and help support.
Jacqueline Cripps, Management Consultant and CEO, JCL