I count myself lucky to be a millennial. Despite our supposed 'overconfidence', 'inward focus' or 'misplaced education', I think we've had a pretty good deal. We're digital natives, with the opportunity to travel unlike ever before, and witnessing ground-breaking innovations. Technology has allowed us to shape and influence the world around us and, of course, we got to be the first generation to use emoji. 🙌
But there's an elephant in the room. A recent PWC report claims that only 24% of over 5,500 millennials surveyed demonstrate basic financial knowledge. As a generation it's clear we're quietly struggling with financial literacy, and we aren't seeking professional financial advice.
As such, the 'advice gap' - those who cannot or will not pay for regulated financial advice - is growing and an FCA report, published in July 2016, concludes that this is driven by the high costs of advice combined with financial illiteracy and a general lack of trust in financial institutions. Paying a financial adviser the UK average of £150 an hour, in addition to travel and time costs is not a viable option for most.
So we struggle to understand personal finances and we don't really know where to turn to get help. It could even be that we're too embarrassed to admit we don't get the basics.
At Finimize we created a free daily newsletter explaining the top financial stories of the day and the feedback from some of our users has been particularly enlightening. One subscriber, a 29 year old Stanford MBA management consultant said: "I can build complex financial models, but was clueless when it came to planning my own finances". He's not on his own, a 30-year old artist manager admitted "I invest in the best up-and-coming artists, but I had no idea how I should invest my own savings". These are phenomenally intelligent individuals with enviable, complex jobs, who tell us they don't know where to start when it comes to their own finances.
Admittedly most of us aren't worried about retirement or a financial plan in our twenties and early thirties (though we should be!). But as one journalist nicely put it: "Retirement may seem like a long time from now, but trust me; it creeps up on you, like wrinkles!" Financial planning in general is something that creeps up on you - one day you wake up and a bunch of financial questions confront you. Can you afford to buy a house? Why haven't I got a pension? How do mortgages work and how do I get one?
That's why financial literacy, and having a financial plan, are essential, particularly in today's uncertain and unstable world. We need to start talking about the elephant in the room and we need to start understanding basic personal finance.
Technology holds the key, with its proven track record of demystifying and simplifying complex industries to the great benefit of consumers. So far technology hasn't really touched on the issue of financial literacy and tech companies need to step up to fill the void left by the traditional advice industry. From the work I do at Finimize, I know that our generation has a real appetite to learn more about our finances - we just want to do it on our own terms, and not have to pay £150 per hour for the privilege.
Financial literacy needs to be brought out in the open. We should admit we haven't the faintest idea of what our future may look like, but that doesn't mean we should bury our heads in the sand. It's time to admit our (financial) illiteracy and embrace a new way of looking at our money. 🎉
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