The millennial generation likes to spend and not save or invest. Research confirms maintaining lifestyle and buying fancy stuff are high among their priorities.
Given that this section of our population is becoming a major part of the economy, making them aware of how savings and investments work is very important.
Here are some tips that will help your millennial clients:
Budget everything
Spending more than you earn to have a good lifestyle is a dangerous way of living. In addition, dependence on credit and loans to fund this lifestyle is also not healthy.
To avoid unnecessary expenditure, you can guide your client to prepare a budget for the month. Though it seems time-consuming, it is one of the best ways to keep finances on track. This will help them in understanding their spending habits and taking control of them.
Save a lot
Most millennials live from pay check to pay check. However, with smart budgeting, one can easily save money. To start with, one can try to save a minimum amount and then increase it every month. The aim is to get them used to saving regularly.
Plan short-term goals
Spending habits of millennials are mostly connected to their short-term goals. Advisors can use this opportunity to make them aware that investments can help in achieving these goals.
“I usually tell my millennial clients to invest for their next short term goals like buying a bike, mobile phone, or planning a foreign trip. This motivates them to save and invest and also imbibe investment habits,” said Vinod Jain, Jain Investment.
Plan for retirement
Most millennials tend to think retirement planning as very distant and fuzzy. Start by explaining to your clients about the need for retirement planning. Starting early for retirement goals will also allow them to save adequately while meeting their standard of living.
Educate them on investments
Some millennial investors tend to take higher risks in the lure of earning a quick buck and invest in risky investments such as cryptocurrencies like Bitcoin.
The advisors' role becomes very crucial in such times as they can direct these young investors to appropriate investment options as per their risk profile.
