Personal financial management means different things to different people, so there is no single “best” way to manage your money. That is not to say sound fundamental principles cannot be applied to most personal financial situations, but there are specific strategies and concerns that distinguish how individuals handle their money. Age, professional objectives, family size, and other factors influence the best approach for each person, so it makes sense to assess your individual needs before setting your course.
Generational differences also exist, prompting those closer to retirement to act in ways that wouldn’t make sense for younger generations. And at the same time, risky speculative behavior undertaken by young people might not be the best path to success for middle-aged individuals. Considering the outside influences is only part of the equation, which also accounts for personality traits and individual life goals. As a result, financial advisors and economic analysts continue to recognize subtle differences in the way individuals think about money. And as they adjust to accommodate differences, some personal money managers are apparently being left behind.
Young People Adopt Distinct Money Views
Each generation is marked by unique phenomena that set it apart from others, so it is not surprising financial concerns are also age-specific. Accounting for these differences is up to each individual, but it is also a responsibility shared by financial professionals and educators.
Up and coming Millennials face an environment very different from the one their parents and grandparents were subject to. As a result, their approach to money is marked by unique priorities and distinct concerns. Employment conditions and student debt, for example, weigh heavily on the lives of young people, who are often struggling to manage these issues. Preoccupied by fundamental financial concerns like debt reduction and upward mobility in the workforce, the younger generation is forced to forego traditional financial objectives like buying homes and cars. Investing in the stock market is also down among Millennials, when compared to the approach taken by previous generations.
In addition to age, personal goals and other influences, financial management is also subject to shifting modes of operation. Technology, for example, continues to alter the way people track and allocate funds. Financial apps and websites dedicated to money matters are favored by young people who are most familiar with these technological advances. FaceTime and Skype are also more popular among the younger set, which uses these and other alternative forms of communication to connect with financial advisors and to increase their knowledge about money matters.
Finding Financial Success at any Age
Sound money management includes meeting daily expenses, but it also relies on strategic planning for future needs. And while each person approaches money matters with unique goals in mind, time-tested understanding is invaluable to financial planners in all age groups.
Money concerns range from retirement planning to mortgage issues, so management emphasizes different aspects of finance for each age group. Surprisingly, those approaching retirement have been the least engaged consulting with professional advisors. In fact, only 36 percent report having done so in their lifetimes. On the contrary, personal money managers in their 30s have become strong advocates for their own security, representing the most active age group seeking professional financial guidance.
Recent research also found that when people do seek financial advice, it isn’t always directed at the most pressing issues. According to industry representatives, retirement planning – especially among those preparing to leave the workforce is the most important financial area to address. In reality, however, greater numbers of those seeking financial advice do so concerning mortgages and other priorities.
Regardless of your age, personal financial success encompasses a variety of issues. And while it appears young people are facing greater debt and delayed access to traditional big-ticket purchases, they are seemingly more likely to seek financial advice from professionals. As you shape your financial direction, account for immediate needs, but also use age, family size and personal goals to plot your course. When in doubt, share your objectives with professional advisors, who are equipped with knowledge and understanding of current financial markets.
Photo courtesy of: Transamerica Financial Advisors