We think of “old souls” as those wise beyond their years. “Old souls” understand their environment and have learned from past experiences.
“Young idealists,” on the other hand, may exhibit behaviors and thoughts contradicting the practical. An idealist is visionary, imaginative, and perhaps a bit of a daydreamer.
Millennials, those 18-34 years old, are a little bit of both, according to Northwestern Mutual in a new report, the 2015 Mutual Planning & Progress Study.
As “old souls,” millennials are pragmatic—64% are more apt to save than spend, and 53% have made financial goals in comparison to 38% of older Americans. Millennials are realists and know traditional “safety nets” like Social Security will prove inadequate.
They scrutinize: Millennials are twice as likely to indicate their generation is financially irresponsible—36% vs. 17%. Yet, they are planners. Nearly half say they have spoken with an advisor or others about retirement, an important first step to planning.
As idealists, millennials are greatly optimistic in the face of financial challenges: 59% think their financial situations will improve this year vs. 41% of other consumers. Further, 71% are secure about meeting fiscal goals and 46% of those who will work past typical retirement age say they will do so by choice.
Millennials have good instincts, the report says. Read on to learn about them.
‘Discipline is the bridge between goals and accomplishment.’ –Jim Rohn, entrepreneur
Previous economic experience shapes conservative fiscal thoughts and behaviors of millennials.
Younger consumers are The Lost Generation of the Great Recession says a report at the Social Science Research Network. Although youthful consumers had opportunity to take advantage of lower-cost assets, borrowing constraints exist and, “Overall, the young suffer the largest welfare losses, equivalent to an 8% reduction in lifetime consumption.”
“Millennials Give Prepaid Debit Cards a Boost,” says cnbc.com. A TD Bank survey shows one-third of consumers age 18 to 34 have used reloadable debit cards. Overall, this is true for only 25% of Americans.
Of all users, 46% indicated the debit cards help them budget and track spending. This is true for 60% of millennial users.
“One of the benefits that came through loud and clear… Millennials like the convenience, the simplicity, and the predictability of the cards,” said a bank representative.
Another example of responsible “old soul” behavior is summarized by The Washington Post. “Good News. Millennials are Savers After All.” A Bankrate survey reveals financial obstacles like child care costs, student loans, and ill-paying jobs do not prevent this cohort from stashing cash.
Thirty-seven percent saved 5% or less toward financial goals. This may seem a small contribution, but “it is more than double the 18% of people who said they weren’t saving anything.”
And, many are saving more than that: 20% put away 6-10%, and about one-fifth stowed away in excess of 10% of their income.
Indeed, “Millennials Are Saving, But Not Enough,” notes planadviser.com. The perspective here is more pessimistic as “the majority could face dim prospects of a comfortable retirement, based on their inadequate current savings patterns.”
Sixty-three percent started retirement nest eggs before they turned 25, but less than one-third save enough.
‘Wisdom begins in wonder.’ –Socrates
One explanation for savings shortfall may be that “Millennials are Scared to Invest,” suggests CNN Money. A new Capital One ShareBuilder survey says 93% of millennials attribute their lack of confidence in making investments to limited knowledge and distrust of the markets (60%).
Another study revealed millennials keep 40% of their wealth in cash. This nonparticipation in investing prohibits millennials from enjoying the wealth accumulation gained by previous generations.
Further result of their skepticism in investing—a consequence of the recession—87% of millennials choose to take their chances and “go it alone.”
A Financial Finesse survey reiterates millennials experienced strong psychological impact resulting from the recession. They are more concerned with not losing money than growing savings.
“This group has the lowest 401(k) participation rate of all generations at 83% in 2014,” even though they have greater opportunity for auto-enrollment plans than older consumers, according to the report.
‘The truest wisdom is a resolute determination.’ --Napoleon Bonaparte
Research suggests that millennials would benefit from being further informed about their financial opportunities. The literature provides insight as to how best reach a younger audience.
A culterwaves study says that “Millennials self-define themselves as a generation that has grown up with constant encouragement” and that on the job, they have “an inherent need for consistent feedback to keep them focused and on task.”
Might this also be an effective communication strategy to incorporate in attempts to assist this cohort with financial planning efforts?
Here’s how to engage them:
A final bit of advice is that millennials “will waste time questioning themselves if no one else tells them how they are doing… Don’t wait too long to give them your thoughts. Check in with them often.”
Finally, 74% of millennials get their news online, says MarketingProfs. And when seeking information specifically on business and the economy, 77% use a reporting source, 64% use a social source, and 58% will consult a curated source.
Provide opportunity, feedback, and assurance as you work with millennials: “Young idealists” with “old souls” shaped by their experiences in a down economy.
Per Oprah Winfrey, it is possible to “Turn your wounds into wisdom.”