Thrift is dead, long live hedonism. That is the attitude being adopted by an increasing number of millennials, who believe no amount of scrimping and saving will improve their bleak financial prospects, according to research released this week.
The survey, commissioned by the wealth manager Investec, found more than one-third of young people want to enjoy themselves rather than put money away for a rainy day.
This is in stark contrast to the more frugal mentality of the baby-boomer generation, only one-fifth of whom said they prefer to spend rather than save.
The research highlights other major differences between the two generations: more than one-quarter of millennials believe there is no point in investing for the future due to “unavoidable” debt like tuition fees, compared to just five per cent of over-55s, who benefitted from free university education.
The vast majority of young people (88 per cent) believe the steep cost of living has made saving much harder compared to times gone by and two-thirds of over-55s agree with that view. However, half of millennials are also falling victim to what Investec calls a “buy now, pay later” culture.
Chris Aitken, head of financial planning at Investec, said: “The culture of thrift has declined in recent years among young people because they have become more reliant on debt to finance their lifestyles.
“University fees mean debt is part and parcel of many young peoples’ lives long before they contemplate taking on a mortgage.”
Separate research recently conducted by Aviva also found about half of millennials treat themselves as and when they want and spend their savings on things they want but don’t need.
Professor Darren Duxbury, an expert in behavioural finance at Newcastle University, said: “We know emotions influence financial decisions, especially regret, a negative emotion related to responsibility.
“Older individuals have been shown to suffer less from negative emotions and to exert greater emotional control than younger individuals.
“By choosing to ignore their finances, perhaps Generation Y hopes to avoid responsibility, and associated feelings of regret, if things go wrong.”
He also suggested the rise of cashless spending on contactless cards has distorted young people’s perceptions of how much money they spend.
“As well as economic value, money also has social and psychological value,” he said.
“When we pay for goods and services by contactless card, we may be conscious of the economic value of money we are exchanging, but the social and psychological value are not as salient to us.”
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