‘Every generation needs a new revolution’
Thomas Jefferson (1743 – 1826)
The rules have changed. The financial plan used to be easy. Finish university debt free, waltz into a job for life, buy an affordable house and finish the last day of work with a handshake, an engraved Rolex watch and a guaranteed income for life. Generation X’s plan was also simple. To buy property, maybe two, maybe more. All at affordable prices. The astronomical rise in house prices has pulled up the property ladder making it unreachable for the next generation.The world is moving faster, is more connected and people have more complex lives than we have ever done before. Millennials need a new plan. We’re in a different world after the tornado of the financial crisis. Putting money into a bank means getting next to nothing from your savings, maybe you’re scared to invest after the financial crisis or simply don’t have the time to learn the seemingly complex world of the stock market. The retirement cliff edge is fast approaching as people don’t have enough for when they stop working and house prices are now so out of reach from the average London worker.
Millennials (also known as the snowflake generation) grew up at the turn of the century and were born between 1980 to the end of 1990s. Millennials do things very differently from their parents. In 1968 if you bumped into a 30 year old, there was a 56% chance that person would be married, had children, had a full time job and a mortgage. Today if you bumped into a 30 year old, there’s less than a 23% that person would have all the same trademarks.
Baby Boomers (who were born just after world war two between 1946 and 1964) are now turning 70 made up the vast majority of the population. Demographers have referred to this generation as the pig in the python. Everything this generation touched became massively disrupted from baby food in the 1950s to consumer electrics and personal computers in the 1990s. Health care and medical expenses is set to rocket in the coming years as 70 year olds require a greater amount of care.
Why Millennials have been screwed over.
Being in the majority has often meant that Boomers have got their way in terms of government policy due to higher number of voters. There have been three ways that millennials have been hard done by in terms of government policy. 1) printing more money (called quantitative easing), 2) low interest rates, 3) the help to buy scheme
1) Excessive lending to people who could afford a house previously (subprime loans) caused the financial crash. Rather than restricting lending to people who had been irresponsible, the government’s decided to print more money (quantitative easing). How can more money be bad? More money in the system means that for every pound that is printed the existing money is now worth less. So the £20 in your pocket is now worth less and the spending power of the pound coin in your back pocket has also been reduced. It also means that assets like the house you wanted to buy has now skyrocketed out of control.
2) The Bank of England (who are employed by the government) decided to reduce interest rates as an emergency measure and has now kept them low for 11 years. This means that the money that you are saving doesn’t receive much interest for lending to that bank. It was previously normal to get 5% in interest rates so you would get £5 for every hundred pound you kept in the bank a year.
3)Thirdly a scheme that is disguised to help first time buyer that actually hurts millennials is the ‘help to buy scheme’ (which should be called the help to sell scheme). The government gives loans up to 40% of the property price to people in London. This increased a person’s affordability who would not have the money to buy previously (there are echoes of the 2008 subprime financial crisis here). Increasing the demand for houses and fuels the already crazy London house prices. This has been great news for the Boomer generation all who own their properties and love to check their houses price rises on Rightmove
The good news
With Millennials now beginning to dominate the workforce, their habits, traits and choices are now heavily influencing the market.
Today we Millennials have never had so many options and choices available for us. We can walk into any supermarket and decide from a vast selection of ingredients to make one of hundreds of different recipes from around the world to make up my dinner. Technology today is incredible, and it give us access that our parents could only dream of. We can hail a taxi in minutes from our phones, we can order almost anything and have it delivered to any where in the world the next day and can fly around the world staying in someone’s home for a fraction of the price and effort it would have cost a generation ago.
We now have to manage our own money for our future self who we look at in the mirror every day. We’re much more likely to live to 100 years old than ever before and need to have an income to pay for these later years.
Technology Changes
Today investment technology has moved far that we can do things today that people would only dream of a few years ago. We can invest in hundreds of different companies large and small in each corner of the world, which reduces the risk we need to take and improves the rewards we receive.
A similar thing happened to the car industry in 1900. Think back to 1900 when at the time the automobile car industry only provided luxury cars to the very rich. It was a young Henry Ford response to build a car that was totally mass produced. It could be driven and repaired by the owner. Where previously it was only for the rich requiring a chauffeur.
Today we have the technology to invest and manage our money easier and more conveniently than ever before. These investment vehicles are similar to turning a key in the motor car, investing for our future can now be done at the touch of a button. These investment vehicles not only enables us to get where we want to go but like the motor cars of the past give us freedom, mobility, power and romance of designing our ideal life in the future.
The opportunities to be financially independent and not have the drudgery the morning commute to work the 9-5 that you hate for the next 20 years until you can retire at 67. Today you can put money into an investment vehicle and knowing by the number you need to get to live on for the rest of your life will give you the freedom that the young had stepping into the motor car for the first time turning the key, deciding their destination and then feeling the wind in their hair as they started moving.
Imagine Henry Ford trying to explain how these new horse less carriages work to someone who had never heard of a motor car before let alone been behind the wheel or putting their foot onto the accerlator.
We are in the same situation with investing. We have these amazing investment vehicles that you can design your ideal life through your life plan and choose how fast you want to go depending on how much you put in and your risk profile.
Today we need education on how we use these vehicles. Simple steps and processes can massively reduce the amount of risk you are taking similar to putting on a seat belt or driving slower in icy condition.
We are not taught how to use these new vehicles at school or in the work place.
In my ecourse I am aim to solve this problem as I guide you through my 5 step money mindset method with the aim of reducing the amount of risk you take and improve your returns, without paying for a financial adviser who like the chauffeurs of the past are not required by everyone.
Step 1 of this ecourse is to automate your finances to give you more space and time in your day to focus on the important things to you, like your business, your family, your life so you don’t have to worry, think, or even talk about money. You can instead concentrate on more important, productive aspects of your life.
Where you have more time, freedom and control so you can enjoy life to its true potential.
We have a choice to cling to the old rules that are grounded more to old habits than sense or correct business practices that have been tested 1000s of time. That we drag our personal finances into 2019 and craft a new approach to help our ourselves, our companies and the world a little better. It won’t be easy, it won’t happen overnight so let’s get started. The only way things will change is when you change. Work harder on yourself than on your job. Living pay check to pay check is not the answer. Doing the same thing and expecting a different result is the definition of insanity. You need to own yourself first. Become your own boss of your life.
Neil Doig is the founder and CEO of the Financial Education company called MoneyTipps. Author of the book Millennial Money Mindset, which was shortlisted for the Financial Times Bracken Bower award in 2018. The book is now on Amazon Kindle and available on audible soon. Neil gave financial advice to individuals and business owners at St James’s Place Wealth Management running his own Financial Planning practice. He has spoken at Universities, workplaces and has hosted a number of events at WeWork Start Up Hub.
Money Tipps 