According to Henry van Deventer, head of business development at Acsis, for many young South Africans, finding a job is only half the challenge - the other challenge is to get to grips, and conquer, some of the thinking that their generation has imposed on them and how this affects their finances.
"The current young generation of jobseekers, often referred to as Generation Y, or the Millennials Generation, born between 1983 and 2003, possess a number of traits that often result in poor savings habits as well as the inability to find their own 'financial feet', when compared to previous generations," says Van Deventer.
He explains that these traits can be directly linked to the current views that Millennials hold. "They are often motivated by passion and see themselves as 'free agents'. If their job fails to engage them, or if they feel marginalised, they are likely to look for another job that will meet their requirements. As a result, Millennials do not have the corporate loyalty of previous generations and their average job span is around two years, and dropping."
He adds that Millennials that have been in the job market for the last five years tend to have a very disillusioned view of money and wealth, which prevents them from acquiring larger assets. "Millennials find themselves in an environment where corporate downsizing has always been part of their working environment. This, coupled with the fact that basic assets, such as homes and cars, are much more expensive than ever before, and that credit has become harder to obtain, it is not surprising to find that the global trend amongst Millennials is to purchase less 'hard assets' than any other recent generation at the same age."
Van Deventer adds that Millennials also live in a more socially connected world than generations before them, and surveys have revealed that cellphones are the most important asset to many Millennials in determining their social status.
"In a recent Pew Research Center survey, in which different generations were asked what made them unique, baby boomers responded with qualities such as 'work ethic', while Millennials offered 'clothes'.
"Millennials are often tempted to maximise their disposable income on items such as clothes and phones, instead of 'non-immediate' items, such as investment contributions. With this in mind, it is also unsurprising to note the very high levels of withdrawals from retirement funds when Millennials change jobs," says Van Deventer.
Van Deventer says that in order for the Millennials Generation to change their savings habits and improve their financial well-being, a few of the views that they hold need a wake-up call.
One view that requires a change is their attitude towards corporate loyalty. "Remaining with a company for a longer period will not only increase an employee's market value, but it will also increase the knowledge and experience that an individual brings to their next job. This creates less of a concern for future employers when deciding on whether or not to invest in training and development," says Van Deventer.
Learning to save first and spend whatever is left over is also a vital behaviour habit to adopt. According to Van Deventer, "Before spending your salary on lifestyle assets, it is important to maximise retirement savings by saving at least 15% of your gross salary. It is also advisable to put a portion of your monthly income aside as a deposit for your first house or car."
He adds that resisting the urge to cash in your pension fund benefits when changing jobs is the most significant action for Millennials. "If you cash in R30,000 at age 28, you are not just losing R30,000, but also the future growth you would have received on this investment up until your retirement. For example, if a 28-year-old had kept R30,000 invested, at an annual growth rate of 12%, it would be worth roughly R2 million at age 65.
"Although these behaviours will feel like big sacrifices at the time, they are key stepping stones in the right direction to ensure that Millennials will be able to create lasting financial well-being," concludes Van Deventer.
For more information, go to http://www.acsis.co.za.
