Written by Christopher Reilly
Some millennials have seemingly embraced the YOLO (“You Only Live Once”) philosophy, where living the good life right now is far more important than planning for the future. Why save money to buy a home when you can use those funds to buy a new car or go on a great vacation?
According to one 2012 marketing study, college-aged millennials spend almost $800 a month on discretionary expenses like food and entertainment. Whether it’s vacations, dining out, or whatever their hearts desire, some 20 and 30-somethings are laser focused on the “now.” Spend it, enjoy it, and don't stress over it. Because, hey, “You Only Live Once.” Right?
While other generations might see this point of view as nothing more than frivolity, or worse, a sense of entitlement, there are very real contributing factors that make millennials’ outlook appear to be less of a choice and more of a stark reality.
“We are a generation that has had to deal with massive student loan debt and higher unemployment compared to other age groups,” said Ann Arceo, founder of a Los Angeles financial planning firm. “It has been hard for the millennial generation to financially start their adult lives. We tend to be focused on paying off student loan debt, and buying a first home is getting harder and harder.”
Few economic indicators offer a clearer picture of the difference between this group and previous generations than millennials’ rate of homeownership. According to a recent study, the number of millennials buying a home dropped from 36.1 percent in 2007 to 34.3 percent in March of this year.
Sophia Bera, founder of a Minneapolis-based financial planning firm for millennials, points to an underlying reason for this generation's aversion to owning real estate, which helps illustrate the profoundly altered, hyper-connected world that young people find themselves in. When your next job is just as likely to be across the country as across town, who needs to be tied down with a house?
“I think the American Dream is changing for Gen Y,” Bera said. “We value mobility over a home.”
Regardless of lifestyle choices, Bera, Arceo and other money experts agree that millennials need to do more to financially plan for retirement, especially since the future is unknown. What retirement will look like when they get there is anybody's guess. “The important thing is to start investing now, so that we have options,” Bera said.
Slowly, some millennials are getting the picture and paying more attention to financial planning. Kristy Hammernik takes a balanced approach, putting some money towards big-ticket items such as vacations or goods to be enjoyed now, and some going towards investing for retirement for later on. That doesn't mean the Port Washington, WI resident doesn't find meaning or value in spending on wants rather than needs. For Hammernik, it's important to enjoy the fruits of her hard work with those closest to her.
“I realize that the number of days ahead are unknown,” Hammernik said. “Making memories with family and friends will be my legacy.”
TELL US: Do you have a YOLO financial philosophy? Why or why not? Post your thoughts in the comments section below.
About this series: As part of our Smart Spending reporting, Patch is profiling people across the country who have found creative ways to save money. If you're a smart spender, we want to hear from you! Share your story here or in the comments section below.