An insight into how millennials navigate the business finance world.
With a collective spending capacity of tens of billions of dollars every year, Australia’s millennials are undoubtedly a powerful financial force in their own right. And that financial power is set to grow rapidly as this cohort – made up of well-educated, technologically and socially aware individuals – really hits its economic straps.
Born in the period between the early 1980s and the mid-to-late 1990s, the members of the so-called millennial generation, also known as Generation Y, now range between 21 and 34 in age and are the largest group in the workforce.
As those in the older generations retire, particularly the baby boomers, now aged in their 50s and 60s, millennials will progressively move up the corporate ladder, including taking over the businesses started by their parents. Others, with a more entrepreneurial flair, will start up their own enterprises. Many already have.
What the Millennials Research Shows
Facebook recently published research following an extensive study it undertook into the financial habits of millennials in the United States. Given the strong similarities between the US and Australia, the research is readily applicable to Australian millennials.
The study surveyed affluent millennials, with 30% of the cohort earning $75,000 to $100,000 per annum, 35% from $100,000 to $150,000, and 35% more than $150,000. They also are largely responsible and relatively cautious, focused on saving for the future and paying down their debts. Almost 60% prefer to pay by cash, and 25% see credit cards as detrimental.
For some, after witnessing the financial devastation caused by the global financial crisis and the volatile economic and financial conditions ever since, having an aversion to bank debt is to be expected. But there is also a strong undercurrent that many millennials lack both financial knowledge and experience, with half revealing they have received no real financial guidance.
Furthermore, only 37% of millennials say they have a financial plan, 16% are unsure and 52% are not sure where to start.
With the number of millennial business startups on the rise, bridging the financial knowledge gap to maximise the financing opportunities that are available to fund growth is imperative.
Learning the Financial Ropes
In many respects, the new generation of business entrepreneurs is better equipped than any other before them to build their financial literacy and skills, and to form strategic alliances to take advantage of the commercial opportunities available.
Indeed, the research from Facebook shows that millennials are actively seeking ways to improve their financial awareness, with a high percentage crowdsourcing financial advice online.
For the first generation that grew up with the internet and mobile technologies, transacting online and sourcing financial information from websites and via social media channels is often the normal process.
Where Millennial Business Owners Should Be Looking
With a plethora of financial information available online, the challenge for business owners wanting to improve their financial literacy is to find resources that are helpful, but most importantly accurate.
Government Help: A good starting point, in the Australian context, is online government sources such as the MoneySmart website managed by the Australian Securities and Investments Commission, and the business information available through the Australian Taxation Office. Such resources can be readily viewed on mobile applications, with smartphones and tablets.
Article Resources: Millennial business owners should also be aware of the vast amount of material available online that can address, in detail, financial and other business subjects ranging from the very general right up to the most complex. For example, Intuit has created a comprehensive database of articles designed to educate owners and improve their financial literacy. These can be accessed at Intuit’s Small Business Centre.
For many millennials, the financial challenges of today may seem overwhelming. Yet, knowing where to access high-quality information that will help ease those challenges and improve financial literacy will make the journey much easier and help business owners flourish.