4 Ways Millennials Can Capitalize on the Latest Digital Finance Trends
As a Millennial, you’ve probably already outsourced your social life to apps. Why not your financial life, too?
Long gone are the days when being fiscally responsible and maintaining a healthy balance sheet required penciling in paper checkbooks and punching a desktop calculator. People who weren’t born in the digital era were forced to remain acutely aware of their account balances and transactions, spending time each month evaluating, tracking, and verifying their finances through means almost incomprehensible to most Millennials.
Today, Millennials don’t need to keep mental track of their personal finances the same way generations before them had to. While it’s easy to chuckle at the thought of owning a Burroughs Adding Machine, we shouldn’t ignore the potentially dangerous outcome of being increasingly disconnected from our cash. With Apple Pay, Venmo, Square Cash, and a deluge of credit cards to facilitate your digital financing needs, all that freedom and flexibility can leave you spiraling into debt.
Millennials Go Digital
Millennials face an exceedingly different social and financial environment than their parents. We work longer hours, make less right out of college, and place greater value on work-life balance than financial reward.
We’re less committal, less likely to invest in the stock market, and getting married at lower rates and later ages. We switch jobs, we rent, we want free shipping, we love free trials, and we take calculated risks in a hurry.
So what has contributed to the philosophical shift in money management?
· Millennials value (mobile) convenience. While our parents were forced to take trips to the grocery store to buy veggies and paper towels, Millennials increasingly look to the convenience of Amazon to get goods delivered to their doors. We gravitate toward goods and services that are available at the click of a button — Amazon Prime Now and soon drone delivery, the expectations for convenience will only continue to grow.
What’s more, if on-demand delivery isn’t convenient enough, Millennials are turning to subscription-based services to remove any possible friction to shopping needs so they can get back to posting travel photos on Instagram. Why remember to buy razors on your way home when Dollar Shave Club frees you of that burden?
· Millennials would rather rent than buy. Our parents graduated college, got jobs, and bought houses. Our generation rents apartments, leases cars, and takes on subscription payments rather than making one big purchase at a time. We value flexibility over stability.
While Gen X would spend hours doing research before making a big purchase, Millennials want to “try before we buy” — if we even buy at all. We’d rather grab a dress for the weekend from Rent the Runway than shell out several hundred or even a thousand dollars on a dress at Nordstrom.
· Millennials prefer financing to saving. If our parents wanted a car, they’d save for years before making the purchase. Thanks to generous lending terms, when members of our generation see something they want, they can quickly calculate the monthly payment and decide whether it’s worth taking on the debt.
With all of the digital convenience Millennials have access to, it’s no wonder money has become “out of sight, out of mind.” But that disconnect can quickly wind up costing you real money. For example, I discovered that I had a subscription I was unaware of that was billing me $40 each month. It took me 14 months to notice before I canceled it. It’s my fault for not monitoring it, but those charges still stung.
Solutions for a Digital Generation
For those of us living constantly on the go, it’s important that we find effective ways of staying on top of our cash (or lack thereof). Thankfully, there are a number of online tools and apps that make managing your money a cinch.
As a Millennial, you’ve probably already outsourced your social life to apps. Why not your financial life, too? With the following four tips, make the most of the free services available to keep your funds in check:
1. Establish some financial oversight. Use online financial tracking software or an app to keep track of your spending and balances in real time. Set up alerts to let you know if you go over budget or if your balance goes beneath a certain amount. Apps like Mint, Simple, and Level Money will keep you on course.
2. Set it and forget it. It’s easy to forget to save, so let technology do the work for you. By creating a savings plan with services like Acorns or Digit, you can automatically deposit the change from your transactions into an investment account. While 40 cents here and there might not be noticeable to you, it adds up over the long term.
Additionally, consider setting up an automatic deposit into your retirement fund. It may not seem necessary now, but you won’t regret the investment in a few short years.
3. Launch your “accounts receivable.” Keep track of who owes you money. No one likes hounding friends for that $10 from dinner last week, so use an app like Venmo or Square Cash to handle that for you. Simply send a payment request from the app, and the payment will automatically deposit into your account as soon as it’s received.
4. Shop smart. Shopping on Amazon or other e-commerce sites is almost always cheaper than shopping in stores. Use an app like Honey to automatically search for coupon codes as you browse the internet — it’s not uncommon to find coupons for 10 percent or even 20 percent off the sites you shop on.
As young, fast, and savvy Millennials, we quickly fall into the trap of assuming our money is being taken care of. However, we can’t allow our financial goals to fall behind simply because we don’t have time. With apps and technology on our side, we can absolutely take back control and make our parents proud.
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