Financial Issues Millennials are Facing Today

Financial Issues Millennials are Facing Today

If you are between 25 to 35 years old, you are probably facing financial pressures.. There are so many problems that millennials are facing and yet not many have undertaken the right attitude to address these issues to improve their finances.

Feel like you need a fresh start? Let’s start with identifying some of the bigger issues that are affecting your financial position so you can take the right steps to grow your wealth instead of getting burdened with more debts.

1. Too obsessed with technology gadgets and online shopping

The obsessions over technology gadgets and online shopping is most commonly seen among millennials today given the advancement of technology and internet these days. 65% of Malaysians now own a smartphone and 88% of them are millennials, according to Pew Research Center’s Spring 2015 Global Attitude Survey.

Despite the positive impact of smartphones, many millennials seem to have a brand consciousness which leads them to switch smartphones frequently whenever world-renowned brands such as Apple or Samsung drop a new model in the market. Check out what you can buy for the price of an iPhone 7 or Samsung S8 in Malaysia.

In addition to that, e-commerce marketplaces like Lazada and 11Street are making it easier for millennials to make impulsive decisions.

2. You know too little about debt

According to a study by the Asian Institute of Finance (AIF), 70% of AIF’s respondents that have credit card debt tend to pay the minimum monthly payment only and 45% did not pay their debt on time. This shows their ignorance towards the dangers of interest rates.

It is common to find Malaysians who are living on the edge of their credit limits these days, just to spend their next ten years clearing their credit card debt. By paying the minimum 5% on their outstanding amount, it is only enough to cover the monthly interest charges but barely clears your credit card debt. For those who do not pay on time, your credit score will be severely damaged and will affect your future approval of banking products.

“Our study reveals that 75% of Gen Ys have at least one source of long-term debt (anything longer than a year) and 37% have more than one long-term debt obligation,” – AIF report. Hire-purchase is the highest loan (56%), owned by Gen Ys while credit card debt and education loans come next (47% and 40%).

This shows the lack of education and explains the decision by millennials to take on all types of loan in the market. In the end, they are all overwhelmed by the high level of debt accumulated and end up paying loans for most of their life.

3. Do not have an emergency fund

In the first few years of employment after graduation, millennials tend to adopt a relaxed attitude towards their finances, because of their instant-gratification behaviour to enjoy immediate returns with their income.

Yet, they are the same group that does not have an emergency fund to prepare for any unforeseen circumstance which is a crucial factor contributing to their meltdown when they lose their jobs or have to pay for medical expenses without an insurance. As a result, they are most likely to turn to credit cards, personal loans or worst of all, loan sharks to resolve their financial issue, which then leads them to an endless cycle of debt repayment.

4. Poor investment appetite

With high debts and a high-maintenance lifestyle, it is doubtful whether millennials have anything left from their disposable income for savings or investment. By having the mindset of ‘I can always do it later on when I have more money’, most millennial always regret not investing at an earlier age.

Only 9% of the correspondents in AIF’s survey are investing in the stock market and it does not help that millennial tend to only seek advice from friends, family, and colleagues (65% to be precise in AIF’s report) which may lead to the narrow information they can get when it comes to investment.

Find out more about investing from as low as RM100. Remember, you will only be able to solve a problem when you identify the problems. We hope this article helps you to identify your financial problems!

 

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