If you’re like most millennials or members of Generation Z, you grew up hearing about traditional financial priorities: graduate college, get a good job, buy a house, have children, save for retirement. But this cookie-cutter plan isn’t necessarily right for everyone, especially in our current economic climate.
If you feel like the traditional financial advice of your parents’ generation hasn’t panned out for you, you’re not alone. It’s a common feeling, especially for millennials (Gen Y) and Gen Zers. While there are plenty of financial advisors who believe it’s still best to stick with those traditional priorities, you’re not going to hear that from us.
Here at Everyday Money, we know that the world just isn’t the same as it was decades ago. You can’t afford college on a summer job, and you can’t count on a generous pension by just sticking with the same company for 40 years. With multiple recessions, record-setting inflation, extremely high student debt, a rapidly changing job market, and a global pandemic, today’s world isn’t one where that traditional advice is always applicable.
You’re dealing with a challenging economy, but that doesn’t mean you can’t pursue financial goals. It just means you need to determine which ones matter to you and focus on those instead of thinking that you need to follow your parents’ and grandparents’ version of The Plan.
Modern vs. traditional financial priorities
Most “traditional” financial advice centers on the priorities that defined previous generations: homeownership, job stability, child-rearing, and retirement. And there are many millennials and Gen Zers who still want all of those things. But there’s also a growing number of younger people who want (or need) to spend their hard-earned money on different things.
Maybe you’d rather travel instead of owning a house. Or you might want to quit the job you got out of college and start your own company. Maybe saving for retirement just isn’t a financial possibility right now. Perhaps you and your partner are childfree. Whatever the case is, there’s a good chance that some part of your money management style represents radically different priorities than your parents had.
A new outlook on spending and saving
According to U.S. News, millennials spend less than previous generations on cars, homes, and retirement. Instead, they are spending more in various other categories. Despite the persistent stereotype that millennials are wasting money on fancy coffee and avocado toast, the reality is that they are mostly spending in these areas:
- Convenience services
- Food away from home
- Streaming services
- Travel
Interestingly, they also spend more than older individuals on social impact (e.g. supporting charitable causes or brands that match their values) and debt repayment (particularly student debt). ThinkAdvisor reports similar statistics; two of the top financial goals of millennials are debt repayment and travel, both of which are more popular priorities than owning a home or starting/expanding their family.
Members of Gen Z have a similar outlook on finances, including the challenges they experience. According to a survey by Bank of America, Gen Zers list these as their biggest barriers to financial success:
- Insufficient income
- Lack of job stability
- Student loan debt
- Healthcare costs
Like millennials, Gen Zers tend to spend a lot on convenience services such as grocery/food delivery and dining out.
Permission to enjoy your life
Unfortunately, these modern financial priorities are causing a lot of people to feel guilt, stress, and/or shame. According to NerdWallet, younger people are far more likely to regret their personal spending than older people. While 83% of Gen Zers and millennials say they’ve experienced regret about their personal spending, only 49% of baby boomers say the same. Over a quarter of Gen Zers say their feel spending regret often or always.
We know there are some financial experts who recommend traditional priorities to every person regardless of age or personal circumstances. But we have a different approach – we think all financial priorities are valid.
We don’t want you feeling guilty about not owning a home or not saving 20% of your paycheck. You don’t need to regret having your groceries delivered or taking a week off of work to rest and recharge. Money is important, but it isn’t life. The most important thing is figuring out what your priorities are, and then enjoying them guilt-free.
So if you want to see the world, travel! Have children, or don’t have children. Find a job you love, even if isn’t what you studied in college. Enjoy good food, take time off from work, pursue your hobbies. Save money for your children’s college or your parents’ long-term care. It’s so much easier to make financial plans and stick to them when those plans match your values.
Follow your financial priorities
Traditional financial priorities have value, but so do their modern counterparts. In some ways, it’s easier to measure “financial success” based on whether you’ve ticked those old boxes: bought a house, saved for retirement, become debt-free. But those aren’t the only measuring sticks – your financial measuring stick should be something that’s meaningful to you. So take some time to figure out your values, and make a plan to support those goals with your money.
No matter what your financial priorities are, it’s easier to accommodate them when you have a budget. Whether you’re saving for a home or getting ready to switch careers, a budget helps you meet your goals. If you and your partner are just starting to budget or are looking for a new money management system, check out BudgetingBlocks™. It makes budgeting fun, intuitive, and simple.