Personal Finance Changes among Millennials and Their Impacts to the Upcoming Generation

EXPLORING THE PERSONAL FINANCE CHANGES AMONG MILLENNIALS AND HOW THEY WILL AFFECT THE FUTURE OF BUDGETING FOR THE UPCOMING GENERATION
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Abstract
Financial management is crucial and determines the ability of a person or entity to meet all the developmental objectives. This study explores the personal financial changes among millennials and how they will affect future generations in budgeting. The study undertakes a qualitative research which entails observation and analysis of existing literature sources. The study focuses on highlighting the experiences of millennials with funds, financial management practices, and loans. The data collected from the study indicates that majority of millennials are in debts or have been in debts. Some of those in debts have even defaulted their loans due to lack of funds as a result of poor financial management skills. The data obtained also indicates that the amount of financial stability that majority of the millennials have is determined by the stability of their parents. The study ends with a call to action for all millennials to improve personal financial management for better investments in the future and to impact the upcoming generations positively.
Introduction and Background
The increasing uncertainty of the global economy has increased the role of financial literacy in making sound investment decisions. The resolution needs to be resolved with the joint efforts of the government, financial institutions, individuals, and society in the era of the millennial generation (Dewi et al., 2020). The recent economic and financial crisis has increased the demand for financial literacy, which can be established for the future.
1.1 Research Questions
1 What are the current Gen Y-induced personal finance changes in the UK?
2 What are the speed and scale millennials have adopted for budgeting?
3 What is the role of budgeting in enabling personal finance disruption among millennials?
1.2 Research Objectives
The research aims to explore the personal finance changes among millennials and their impact on budgeting for the upcoming generation. The objectives are:
* Exploring the Gen Y induced personal finance changes in the UK
* Exploring the speed and scale millennials have adopted in budgeting
* Exploring budgeting as an enabler of personal finance disruption amongst Millennial to handle these challenges.
1.3 Motivation of the Research Topic
The choice of financial products and services is increasing for youngsters, making financial literacy important. Therefore, the topic is chosen to increase youngsters' awareness of personal finance challenges among millennials.
Literature Review
The millennials are a generation that is unique in many ways. One way that they are unique is how they view personal finance. It is an important area to understand because how millennials view personal finance will likely impact how future generations approach budgeting. One clear thing is that millennials are more comfortable with debt than past generations (Dewi et al., 2020). de Bassa Scheresberg & Lusardi (2014) found that 71% of millennials do not believe that debt is terrible, compared to only 46% of Generation X and 28% of baby boomers. It is likely because millennials have had more opportunities to take out loans and use credit cards than previous generations.
This willingness to take on debt may harm future generations when budgeting. Because millennials are more willing to borrow money, they may be less likely to save for their future. Insights (2019) said they might be more likely to take on high-interest debt because they are more comfortable with debt. However, it could lead to problems down the road when they cannot repay their debts. Another area where millennials differ from past generations is their attitudes towards spending.
A study by Walsh & Lim (2020) found that millennials are more likely than any other generation to view spending as a way to have fun and celebrate life. This attitude may lead them to spend more money than they should, impacting their ability to save for the future. In addition, millennials need to be careful in their financial management. These factors make it necessary for millennials to be careful about their finances. They should make sure that they are saving for the future and avoid taking on high-interest debt. In addition, they should view spending as a way to have fun and celebrate life, rather than simply as a means of obtaining money.
Methodology/ Research Design
3.1 Data Collection Techniques
The researcher will emphasize qualitative research, where the information will be collected from secondary sources based on newspapers, journals, and books. Qualitative research is subjective and offers rich and in-depth insights into the topic based on research. This type of research can be used to explore different thoughts to understand the reasons behind their actions (Silverman 2020). This type of research can be beneficial when investigating social issues or understanding people's experiences.
The researcher will collect the secondary information by using an analysis approach of secondary sources. The information will be collected from a variety of sources such as academic journals and books exploring millennials’ experiences in budgeting/financial problems. Therefore, the secondary data is collected to update the research through documented experiences previously gathered from knowledgeable people.
3.1.1 Overcoming Quality Issues
The quality issues are overcome by only relying on relevant sources that are developed for academic purposes. In addition, the information would be collected from at least twenty different sources to improve the research generalizability.
3.1.2 Ethical Consideration
The researcher will not manipulate the information to present the desired results. All the statistical and factual statements obtained from the reviewed literature would be cited appropriately to give credit to the original authors. This practice will also be crucial in eliminating plagiarism.
Analysis
The analysis is emphasized on the thematic analysis, where the literature review would entail in-depth analysis. The researcher will conduct analysis of existing literature and the information collected from the sources will be categorized into different themes. The research analysis would have at least 5 to 7 themes. The advantage of the thematic analysis is that the information is arranged in different categories, so it can be checked to determine the variance in information from different sources. In addition, the thematic analysis identifies and analyzes repeated patterns that involve interpretation in selecting codes and themes. There are several benefits of thematic analysis. One benefit is that it can help to identify patterns in data. It can help to understand the underlying meaning of data (Silverman 2020). Additionally, it can help to identify sub-groups within data. Additionally, it can help identify essential themes to a particular population (millennials).
Results
The researchers established that the data presented in the existing literature showed majority of millennials had existing loans from financial institutions. They had already defaulted on the loans since they could not manage to pay because they misused the funds. In other instances, high living standards made it impossible for the millennials to save enough or earn adequate income to enable them service their loans. Such issues led them to leave the loans unattended because raising the money was a problem. They also feared being blacklisted since the grace period for the payment had elapsed. Other millennials in general population were continuously paying their loans but with difficulties, which made them get into more debts to service the existing debts. A third of the sources indicated that majority of millennials had previously obtained loans from financial institutions and used the funds to set up investments. However, none of them were willing to secure other loans since they believed debts drain people financially and deny them a chances to plan for the future adequately due to the continuous efforts to settle these debts.
Consequently, results obtained from the sources show that millennials who grew up in families with financially stable parents were able to stand up for themselves and managed to develop financial independence. On the contrary, those who had struggling parents also struggled in adulthood since they could not achieve to get the support, they required to set strong foundations. The findings obtained from observing and analyzing existing literature indicated a trend of funds mismanagement among millennials due to wrong beliefs about the future.
Discussion
This study indicates that majority of millennials are already in debt or are willing to secure loans to achieve some financial targets. This perspective shows that the millennials are in an era when they do not consider the risks of debts; instead, they only focus on what the finances obtained through debts could help them. It is a risk factor since the more debts there are among the millennials, the lower the rate of development since all the benefits obtained from businesses and even the little income from salaries will be used to finance debts. Therefore, it is a cycle where funds only get to the millennials whenever they need to achieve particular objectives, and once the projects are accomplished, there are no funds to save (Rey-Ares et al., 2021). Such are the high risks associated with poor personal financial management since it is a way of draining future generations into catering to the debts obtained by the current generation. For instance, when parents secure loans, long-term loans, they might use the funds to set up investments for huge returns. However, such loans might be a burden to their children in the future since they might have to pay back the money they did not use. It is the case with the current generation of millennials who are too much into debt. Therefore, they will have minimal chances for personal development, thus sending themselves into financial struggles in old age. At that time, it is the future generation of millennials who will be burdened to look after their parents and serve family interests instead of having humble time to develop themselves financially.
According to the study results, the participants range between 25-and 40 years, meaning they are better experienced in financial handling, making them the best fit for this study. According to the responses gathered from this population, it is evident that millennials prefer luxury more than investing since they have the notion that life "life begins at forty" (Çera et al., 2020). Such notions mislead millennials since they always believe that they have all the time to do other things and start investing when getting into old age (Junita, Robin & Yulfiswandi, 2021). The fact is that there is no guarantee for a job the next day, and therefore, anyone could get laid off from their work at any time. The question of interest could be, What next? For instance, during the COVID-19 pandemic, many people lost their jobs due to low production and measures of the companies to minimize congestion at the workplace. Before then, some people relieved of their duties could not have believed they could lose a job since they were disciplined and had no issues with their bosses. Millennials have to focus and plan strategically about their financials with plans.
Typically, the upcoming generation depends on the financial stability set by the preceding generations. Such aspects that could affect the upcoming generation include taxation rates, inflation, and interests’ rates. All these depend on the country's financial stability, which is also dependent on the personal finances of the citizens. If a majority of the citizens have healthy financial management strategies, then it will be effective for the government to manage public funds and maintain favorable interest rates since there are low poverty levels. In cases where individuals have poor financial management, there is a likelihood of high poverty levels, which will force the government to impose measures to generate adequate resources to cater for the low class (G...