Articles / Money management

Finance expert reacts to millennial views on money

11 July 2022 | Posted by Claro Money

Millennials often get a lot of stick when it comes to things like career aspirations, laziness and a perpetual desire for flat whites. But how accurate are their opinions on things like spending, saving and retirement funds? Our finance expert, Mike, reacts to millennial views on money.

We put two brave millennials, Jemima and Danielle to the test, who truthfully answered our questions about all things finance. But what they didn’t know was that our expert financial coach Mike was listening next door the entire time. He gave his two cents (or 1.5p) on their views, adding some guidance along the way. Let’s see how they got on.

Can you save money and have fun at the same time?

Jemima’s absolutely certain that you can. She reckons it’s all about finding the right balance through budgeting. “What’s the point in dying with all this money if you can’t spend it when you’re alive?”, she asks. Jemima’s philosophy is to do the things you love while making sure you’re saving enough to keep you going on a rainy day. 

Expert Mike agrees. He’s keen to remind us that budgeting shouldn’t be a restricting thing. So long as you allocate a “fun pot”, you can still indulge in the occasional treat and this way, it’s a guilt-free endeavour. With this method in place, you can continue to have fun in the long term.

At what age should you start saving for retirement?

Danielle says you should start putting money aside for your retirement from when you begin making money, and Expert Mike praises her views. He reminds us that the rule of the thumb is to save as much as you can, as early as you can. Missing out on 5-10 years at the beginning of your working career can have an exponential result on your eventual retirement pot. You’ll have higher returns if you start saving from the get-go, he says.

Would you rather end student debt forever or credit card debt forever?

Jemima votes for student debt, as she feels that learning is an experience that everyone should have access to, and crippling student loans shouldn’t prevent people from learning. 

Mike disagrees, as he says that student debt is low interest. For the majority of people (up to 80% in the UK), they’ll never clear their student debt, so it doesn’t really matter. With credit card debt, Mike explains that it’s high-interest debt (upwards of 20-30% APR), so we should clear that first.

Should credit cards be avoided?

Danielle doesn’t think so. “What do you do if you have no money?”, she asks, and adds that credit cards are good (so long as you stay on top of repayments). The advantage is that you can build your credit score and a credit card can help you to stay away from payday loans. 

Expert financial coach Mike agrees with the avoidance of payday loans. He thinks credit cards can be good for building a good credit score, if you clear the balance each month or have a money management scheme in place to avoid interest. Using them frivolously and using buy now, pay later is a slippery slope, according to Mike. “Be careful”, is his guidance on the matter.

Would you be more likely to invest in crypto, NFTs or the stock market?

Jemima doesn’t fancy any of those options, instead preferring to invest in property. She’d rather invest in something tangible as it feels like a safer option. More knowledge could tempt Jemima in investing in crypto, but as of right now, she’s not interested.

Mike approves of the property investment Jemima mentioned. He says having a residential mortgage and building a property portfolio is a really good way to diversify your investments. Some choose physical property, others go for real estate investment trusts, either way, diversification is key, according to Mike.

Would you rather have a job you hate that pays well, or a job you love with a low salary?

Danielle’s a firm believer that you should do what you love, as it doesn’t feel like work and you end up getting better results. “We work to live, not live to work”, she adds.

Mike questions what high income or low income is defined as, as it’s all relative to the person and their individual circumstances. He joins Danielle in stressing that the most important thing is to love what you’re doing, as long as your bottom-line needs are met, there’s very little else a high salary can do to give you life satisfaction. Mike’s wise words are that avoiding misery in work is key.

Is buying a home always better than renting?

Jemima thinks so. She’d rather have a home to invest in as you can often end up paying more in rent than you would for a mortgage, so long as you have enough for the deposit.

Mike finds the obsession with owning property in the UK to be far from black and white. He mentions the common view that renting is “chucking money into a black hole” as you’re paying off someone else’s mortgage, while paying for your own is helping you retain it as an asset. However, Mike stresses that renting allows you to avoid paying for things like household repairs, so there are benefits to both options. 

Do you think it’s harder for millennials to save for a house than previous generations?

Danielle thinks it’s definitely harder, stating that “house prices are insane now”. She mentions that the cost of living is “way too high now” and doubles down that previous generations had it easier than millennials when it comes to buying a house.

Expert Mike mentions that house prices have gone well beyond inflationary rises, so it’s not just a matter of “different times”, as house prices are significantly more expensive now compared to what they once were. But he adds that once you’re on the property ladder, interest rates are now lower than they used to be, so repayments used to be harder. 

Do you think more education around managing finances should be given in school?

Jemima makes a hilarious point: “I’ve never used calculus in my life, but no one taught me how to balance a chequebook or open an account or how credit cards work”. She thinks things like utilising savings accounts and building your financial future should be taught, especially during teenage years. Jemima makes the point that mistakes in early life can affect your credit score and that can be avoided through education. 

Mike praises Jemima’s views. He states that finance isn’t taught in schools, particularly not when he was attending. As a result, the UK has a low financial literacy level, meaning people don’t know how to manage their money. “It’s no wonder people get into debt and make bad decisions”, he says, giving Claro’s aim to empower people to make smarter money decisions a quick plug.

Watch the full video here.

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