By Trevor Clawson

Britain’s Millennials – the generation born between the early 1980s and the mid-1990s – face some daunting financial challenges. Those who went to university could be nursing student loan debts of up to 40,000 and when the time comes to buy a house, the mortgage deposits demanded by banks mean that some serious saving is required, even to get a foot on the property ladder. And just to make things even more challenging, ‘millennials’ are coming to the workplace at a time when wages are failing to keep up with inflation.

And as Benedetta Arise Lucini, founder of money management education app, Oval Money points out, student debt has “contributed to a widening gap between those who can rely on family for support and those who can’t.”

So, money management is crucial. But according to new research carried out by the polling organisation Britain Thinks, while money management is considered by millennials to be important, it is not necessarily considered ‘cool’ and nor do they feel well equipped to make important financial decisions.

Hungry for Good Deals

On the face of it, Britain’s  Millennial generation ought to be one of the most money savvy in history, not least because of the options available to them, whereas their Generation X predecessors had to make do with a handful of banks offering a limited range of financial services, today’s young adults can take advantage of a whole range of app-based products, by shopping around it’s possible to get better deals on savings, current accounts that provide data-based financial management tools, low-cost money transfers and dozens of other services.

And as Paresh Davdra, founder of payments company Xend Pay says, Millennials are prepared to look beyond the traditional banks for money advice, support and services.

“They are hungry for good deals. And because of all the issues with the banks, they are less sceptical about trying new services.”

But as Britain Thinks reports, that hunger for ‘good deals’ doesn’t necessarily translate into a coherent or comprehensive approach to financial planning.

A Sensible Generation

First the good news. ‘Millennials’ are – collectively speaking – a very sensible bunch. When asked about their priorities in life, 55% of those questioned by Britain Thinks put money management as one of their top three priorities in life, on an equal footing with getting a good education or training.

But if money management was seen as a priority in theory, in practice it often ranked well below having fun. If it came to a straight choice between putting some money aside and having a night out with friends, socialising tended to come first.

And the survey reveals significant social pressures on young adults to match their peers in terms of spending. The ‘keeping up with the Jones’ effect was also exacerbated by social media where posts about holidays, the purchase of luxury goods or nights out fuelled a desire to not to fall behind.

Despite an acute awareness of the importance of money, almost a fifth of those taking part admitted that the subject of finance was taboo  –  something that they didn’t like to talk about due to fears about being compared unfavourably to others and thought unsuccessful. More fundamentally, there was a general feeling that talking about money – and particularly budgeting was boring or uncool.

Living Day-by-Day

Millennials are digital natives, having grown up with the internet and come of age just as the iPhone and its smart counterparts were revolutionising mobile telecoms. So, with smartphones constantly on hand, it’s perhaps not surprising that 80% of the those who took part in the survey said they regularly checked their bank account. But this was not necessarily due to a commitment to managing money effectively. In fact, most said they would only check their accounts towards the end of the pay month to reassure themselves that sufficient funds were available to see them through the final few days. To put it another way, millennials manage their finances month-to-month rather than pursuing any long-term strategic plan.

And many of those questioned acknowledged a lack of self-discipline when it came to looking after their cash. So much so, in fact, that some admitted to taking steps to make it harder to access savings. The measures included giving cash to trusted family members – such as aunts or grandmothers – to look after on their behalf.

Bad Education

A very large majority (85%) said they had not received sufficient tuition finance issues during their school years, and that meant many had gone on into higher education or into the workforce feeling ill-equipped to deal with the money problems that inevitably arise.  However, there was also a reluctance, to seek guidance, with 41% saying they would never take advice on financial decision making.

The Marketing Challenge

All this presents a challenge for educators, policymakers and finance firms – namely how do you make financial planning relevant for a group that feels squeezed in terms of income and outgoings and perhaps unable to see any way through to purchasing a home or saving enough for old age.

“Millennials want to save but much of the advice they receive on how to do so can feel out of sync with the realities of 21st-century living,” says Lucini. “ It can be difficult to know where to start, so the tendency is to put saving off until another day when you think you’ll be better prepared to tackle the challenge.”

Britain Thinks says that any financial messaging to young adults should focus on what is achievable, given the circumstances of the individual.  Millennials are unlikely to respond to reprimands along the lines of – you are not saving enough for your pension – and will be much more receptive if they are given information and tools that are empowering. Equally important, this is not a generation that enjoys being talked down to or addressed with marketing sound bites. When they are making complex decisions, they want the kind of comprehensive information that will help them to arrive at the right choices.