Financial Freedom For The Millennial

By Vanessa Papas

Emma Stone, Jennifer Lawrence, Kristen Stewart, Mila Kunis, Justin Bieber
and Hilary Duff are all part of the millennial generation. Who qualifies as a millennial? The millennial generation is the generation of children born between 1982 and 2002, some 81-million children have already entered university and the workforce. This generation will replace the Baby-boomers as they retire. We put the exact date range of millennials as those who are 18-35 today – basically today’s high school graduates to 35-year-olds.

“Millennials are ever the hot topic locally and globally. In South Africa, they make up nearly half – 46 percent to be exact – of the population. Whilst many have opinions about millennials, one thing that cannot be disputed is that they are hungry for growth in their education, their skillset and the stability of the economy as established by the 2018 Deloitte Millennial Survey,” says Francois Viviers, executive of Marketing and Communications at Capitec Bank.
kirsten stewart at cannes film festival
“In a survey we conducted 40 percent of South African millennials stated they want a better paying job, 37 percent want to pay off outstanding debts in order to live better and 32 percent are intent on saving. When questioned about what they would like to save towards, it comes as no surprise that a whopping 40 percent would like to own their own property; while 22 percent of respondents are more deeply rooted in exploring the world and a further 21 percent of respondents are looking to upskill themselves.”

Francois gives tips on how millennials can achieve their financial goals:
Budget With The Help Of Technology: While budgeting may sound difficult it doesn’t need to be. Technology has made it much easier. Budgeting apps can quickly give you an overview of your monthly expenses and how you are spending your money. A good rule of thumb is to ask yourself the following questions: is 50 percent of your household income going towards essential expenses such as your home loan or rent and food? Is 30 percent going towards your financial priorities such as savings and education? Is 20 percent going towards lifestyle choices such as entertainment and clothing? Be sure to also pay yourself first. Many people save by placing the money they have left over at the end of the month into a savings plan. You’re likely to save very little this way. Rather set up a recurring monthly payment and transfer the amount you’d like to save into your savings plan before spending any discretionary income. Capitec clients can do this on their banking app.

Lose The Splurging Problem: South African A-list actress and two-time Emmy Award-nominee Thuso Mbedu is no stranger to saving and reiterates the importance of cutting out unnecessary expenses. The 27-year-old millennial recently bought a home with her sister after years of saving. “My biggest tip I can share is to begin saving. It might seem like you don’t have the money to spare, but by taking a closer look at your budget and cutting out a few things you can make a start. Compound interest then acts in your favour, which over time makes a significant difference towards reaching your savings goals,” says Mbedu. When spending money, ask yourself, ‘is there a more affordable way to do this?’ You’d be surprised at how this will help you cut back on expenses. For instance, a trip to the movies could set you back almost R140, while renting a movie at home and making your own snacks could cost you R70 less.
Use The Correct Savings Vehicle: Part of the art of saving means picking the right vehicle to ensure you get maximum return on your money. Placing your money in a bank account does not necessarily mean that it is earning interest. Most cheque accounts don’t offer any interest and not all savings plans are created equal. Capitec clients earn interest on their transactional account and get access to four savings plans, offering up to 9.25 percent interest per year. Experts recommend using a savings calculator to determine how much you need to save each month and the vehicle to use to reach your goals.

Limit Those Treats: This may not seem like a good savings tip at first glance but setting aside money to spoil yourself once a month takes the edge off – whether it be a spa day or a new pair of sneakers or a weekend away. Yes, you may not be getting everything you desire, but you are fulfilling one want amongst the list of needs. Set aside a fixed amount of money on this monthly and do not let it fluctuate based on what you want to buy. If it’s R250, keep your treat to R250 every month. No exceptions, not even for a sale on a pair of Fenty x Pumas.
Don’t Work For Your Money; Make Your Money Work For You: Technology is making it easier to earn an income from the additional resources you have. For instance, Airbnb lets you rent out an unused bedroom in your house and many apps exist that allow you to rent out excess storage space. Have a look at the things you own and then ask yourself, ‘could these earn me extra money?’ Place the money you make from your side hustle into a savings plan rather than using it for everyday items such as clothing or movie tickets. The money will then earn interest and you’ll have additional money to grow your side hustle, increasing your earning ability.