Minimal vs FOMO: what are young people really up to with their money?
The spending habits of our younger generation 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? Find out more about money habits of millenials.
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 channeling more of their cash into dining out, weekends away and holidays. In 2015, JPMorgan collated data from credit card spending by millenials (those born between 1981 and 1997) and non-millenials (born before 1981). They found 34% of spending by millenials was on travel, entertainment and dining, compared with 28% for non-millenials.
With less emphasis on buying stuff, this could be seen as a welcome minimal movement among millenials. 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. “It used to be that our car, or handbag or wallet showed our status,”says James Wallman, a trend forecaster and the author of� Stuffocation: Living More with Less. “Now we post Facebook pictures from a chairlift in Chamonix or the latest music festival. Social media is supporting this change. Posting pictures of what you just bought is gauche; posting pictures of something you’re doing is fine.”
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 millenials 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
Our guest contributor James Trethewie Financial Planner AFP®� has a great range of tips for getting to grips with being financially independent. Automating your cash flow is one of the key recommendations James has for anyone seeking to stick to a budget, regardless of their age. “Budgets are much harder to stick to when all your spending comes from the same pot of money,”says James. “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 you 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. Sharing some figures from a recent Mamamia feature on how much millenials actually have in the bank could get the ball rolling and encourage your peers to talk openly about what they earn, spend and save.
 The Guardian, Just do it: the experience economy and how we turned our backs on ‘stuff’, Simon Usborne, 13 May 2017, “Simon Wolfson, chief executive of Next, blamed the clothing chain’s� first fall in profits for eight years on the move from buying things to doing things.” https://www.theguardian.com/business/2017/may/13/just-do-it-the-experience-economy-and-how-we-turned-our-backs-on-stuff
 Business Insider Australia, There’s a big difference between how millennials and their parents spend money, Matt Turner, 14 September 2016, “The chart below shows what millennials and non-millennials purchased using Chase debit and credit cards in 2015…You’ll see that millennials spend a lot more on “experiences,” or things like travel, entertainment and dining.”https://www.businessinsider.com.au/jpmorgan-chase-gordon-smith-millennials-spending-patterns-2016-9
 The Guardian, Just do it: the experience economy and how we turned our backs on‘stuff’,Simon Usborne, 13 May 2017, https://www.theguardian.com/business/2017/may/13/just-do-it-the-experience-economy-and-how-we-turned-our-backs-on-stuff
 Forbes, What To Do If Your Social Life Is Making You Broke, Dani Pascarella, 29 April 2018, “Nearly 40% of Millennials have gone into debt to� keep up with their peers.”https://www.forbes.com/sites/deborahweinswig/2016/09/07/millennials-go-minimal-the-decluttering-lifestyle-trend-that-is-taking-over/#690b88773755
 Forbes, What To Do If Your Social Life Is Making You Broke, Dani Pascarella, 29 April 2018, “Two-thirds of Millennials regret spending more on social situations than they had initially planned.”https://www.forbes.com/sites/deborahweinswig/2016/09/07/millennials-go-minimal-the-decluttering-lifestyle-trend-that-is-taking-over/#690b88773755
Online source: Produced by The Financial Financial Planning Association of Australia and published on 23 July 2018. Original article.